20 Apr California Sunshine, In N Out, and LA Traffic, Oh My! Lala Land of Burgers
This week’s blog is a guest entry by ICONIC partner Jacob Sworski, reflecting on his family’s spring break adventure to the Lala Land of Burgers.
For Spring Break this year, my family and I decided to break our tradition of going to sunny Mexico and instead chose the West Coast as our destination. Our ten-day trip was filled with different daily adventures the city of angels, Los Angeles.
Hungry from a four and half hour flight, the first stop for the family had to be In-N- Out Burger. We sought out the greasy hot spot of east coast envy to taste for ourselves. Once we found it, we were in complete awe of what was in front of us. Jamming is an understatement. The line stretched through a zero vacancy dining area out and into the parking lot. The drive thru lane was double stacked into the main road and was interrupting traffic while ipad armed cashiers walked the lot placing orders to expedite, truly a masterful orchestration of quick service dining.
I began to ask myself what many others have asked before, why doesn’t In-N-Out expand nationally? The answer isn’t as complicated as you may think.
Food quality control is the one of the core inhibitors to growth. In-N-Out prides itself on providing and serving fresh food. They refuse to use microwaves or freezers in any of their locations. While this idea is not new, it certainly has gained new traction with McDonalds, Wendy’s and Burger King as well as many other chains. Company policy provides that all In-N-Out locations must stay within 300 miles of company’s distribution facilities. Here lies the first hurdle. If they were to open an East Coast or a Midwestern distribution center, with that would need to come a regional marketing department, site selection, and the roll out of an entirely new business plan and strategy. Similarly what if the wildly popular chain, didn’t resonate the same way in the new market, a significant investment could potentially be lost or marginalized.
By keeping their geographic reach regional, In-N-Out is able to create an heir of exclusivity and perpetuate the “hype” of being only on the West Coast. Drawing crowds of tourists that flock to California for vacation or to see the movie business up close. Long lines were common at almost every location we passed, maintaining the position of a leading fast food chain.
Somewhat more obvious is competition. The Nation is filled with Burger concepts from coast to coast. Five Guys Burgers and Fries, for example is dominant on the East Coast and has made strong inroads into the Midwest. Danny Meyer’s Shake Shack is quickly forging across the country with unprecedented buzz. New burger franchises like BurgerIM, an ICONIC tenant representation assignment here in Michigan are all strongly entering the market with a heavy emphasis on growth.
In-N-Out remains privately owned by the Snyder Family, who repeatably states it will never franchise or go public. This position alone makes it very difficult to fuel a national expansion effort which would require a tremendous capital injection. Even though the company has branched out as far East as Houston Texas, they have no future plans of moving further East. As many of us would love to see this happen, for now it will only remain a line item in our itineraries when heading West of Houston, or a simply a “go-to” spot after a long night of fun.
Thank you for reading, I look forward to hearing your thoughts on the topic, so please comment, email or call!
Jacob Sworski – Managing Partner, ICONIC Real Estate