In-N-Out Burger Marketing Plan: Strategy & Analysis

Executive Summary

In-N-Out Burger is one of the most well-known fast food chains in California, Arizona, Nevada, and Utah. Although it is famous among consumers, it is a private company that does not franchise. Daniels (2010) reports that there are 232 restaurants since the first store opened in Baldwin Park. The company's mission statement is "Quality You Can Taste," and the company has developed a simple menu of old-fashioned, fresh, and juicy food, supported by strong employee performance and customer loyalty.

According to the growth-share matrix, In-N-Out is positioned as a Cash Cow, meaning it holds high market share with low growth. In-N-Out remains popular among customers and increased annual sales to $500 million in 2009 from $285 million in 2002 (Daniels, 2010), even though it has gradually opened new stores. This also indicates that In-N-Out is positioned for growth in its product life cycle. In-N-Out faces competitors such as McDonald's and Burger King, but it differentiates itself by maintaining an old-fashioned style and serving fresh hamburgers, which its customers prefer over the prepared frozen food offered by rivals.

On October 22, 1948, Harry and Esther Snyder founded the first In-N-Out Burger in Baldwin Park. Baldwin Park was one of the fastest-growing cities at the time; the population increased by 52 percent between 1940 and 1950 (Perman, 2009, p. 31).

Company History and Brand Identity

The first store was small and did not provide seats for customers — it was a drive-through only. It was the first food restaurant in California to use a drive-through, designed to target the more than one million people in Los Angeles, where four out of five family members owned a car. The name "In-N-Out" came directly from the concept of the drive-through system, meaning "customers driving in to order their food and then driving out without leaving their cars." The drive-through burger shop appealed to American customers because In-N-Out used high-technology speakers connecting employees and customers, and because hand-held burgers fit naturally into Americans' busy lifestyles (Perman, 2009, p. 40).

Harry Snyder's founding philosophy was to use fresh, high-quality ingredients. His goal was that "he wanted to take the lettuce out of the ground, the tomato off the vine, and the onion to prepare the burger fresh right now." To reinforce cleanliness and transparency, Harry introduced an open kitchen where customers could see how employees prepared burgers and how the kitchen looked from outside (Perman, 2009, p. 45).

Original prices were 25¢ for hamburgers, 30¢ for cheeseburgers, 15¢ for french fries, and 10¢ for soft drinks. The first In-N-Out earned approximately $1,100 from two thousand burgers in its first month (Perman, 2009, p. 38).

The name "In-N-Out" came from the concept of the drive-through system, meaning "customers driving in to order their food and then driving out without leaving their cars." The drive-through format appealed to American culture because high-technology speakers connected employees and customers, and hand-held burgers suited Americans' busy lifestyles (Perman, 2009, p. 40). In-N-Out's logo is designed with a yellow boomerang arrow and the words "WE ARE OPEN" in black lettering (Perman, 2009, p. 2).

In-N-Out is a private company operating food outlets in the United States. It was founded by Esther and Harry Snyder in 1948, and is now owned by Snyder family descendants. Harry Guy Snyder serves as CEO. Annual sales for the fiscal year ending December 2008 were $500 million (Daniels, 2010). Although the chain continues to receive many franchise requests, it does not intend to franchise or open nontraditional units (Wilson, 2006).

In-N-Out University was founded in 1984 as a facility where management-level employees learn instruction, communication skills, motivational theories, decision making, and how to run each store. In-N-Out has a four-tier manager structure at each store, and attending the university is a requirement to advance to the next level; it takes approximately five years to advance from a first-level manager to store manager (Perman, 2009, pp. 133–137).

To motivate employees, In-N-Out pays two to three dollars more than the minimum wage and offers profit sharing. Part-time employees also receive free meals, paid vacations, 401(k) plans, and flexible schedules. In-N-Out respects its employees because their performance directly influences customer satisfaction. Highly motivated employees who maintain a strong work ethic are able to sustain the highest possible level of quality and ensure that their skills meet or exceed customer expectations (Perman, 2009, pp. 138–140).

Product Portfolio and Secret Menu

In-N-Out has a single product line that includes hamburgers, french fries, and drinks.

The menu features three types of basic burgers, french fries, soft drinks, and milkshakes:

Hamburger — a beef patty, lettuce, tomato, onion, spread, and a bun.
Cheeseburger — a beef patty, lettuce, tomato, onion, spread, one slice of American cheese, and a bun.
Double-Double — two beef patties, lettuce, tomato, onion, spread, two slices of American cheese, and a bun.
French Fries — fried in 100% pure, cholesterol-free vegetable oil.
Milkshakes — made from real ice cream.
Soft Drinks — Coca-Cola and Pepsi.

In-N-Out's food is free of additives, fillers, and preservatives. No food is made from over-processed, prepackaged, or frozen ingredients. As a result, there are no microwaves, heat lamps, or freezers at any of the stores.

Beef — 100% pure beef. In-N-Out operates its own patty-making facility in Baldwin Park, CA. The facility uses only whole chunks from premium cattle, inspects every chunk to verify it meets In-N-Out's standards, grinds the beef, and forms it into patties. The patties are then delivered fresh to every store.
Tomatoes — selected for ripeness and juiciness, then cut at each store.
Lettuce — hand-leafed at each store.
Potatoes — delivered from farms, cut at each store, and fried in cholesterol-free vegetable oil.
Buns — made from old-fashioned, slow-rising sponge dough and baked daily.

Beyond the standard menu, In-N-Out offers a well-known secret menu that accommodates individual customer preferences. A Grilled Cheese includes two slices of melted American cheese, lettuce, tomato, and spread on a freshly baked bun, with or without onion. Protein Style replaces the bun with hand-leafed lettuce. Animal Style features a mustard-cooked beef patty, additional pickles, extra spread, and grilled onions. Customers can also add extra patties and cheese — for example, a burger with three beef patties and three slices of cheese is called a "3×3." A Vegetarian Burger is also available, replacing the beef patty with an extra tomato. Customers can order any of these customizations at each store (Perman, 2009, p. 92).