Why In-N-Out Isn’t Coming to a City Near You

This video is sponsored by Brilliant. The first 200 to use the link in the description
get 20% off the annual subscription. Anyone whose ever been to In-N-Out knows to
expect, no matter where you are, the same, consistent burger, smiling cashier, and long
lines. Residents of Portland, Oregon were known to
drive four hours each way to the nearest restaurant in Grants Pass, and before there were any in Phoenix, locals
supposedly flew to Ontario, California, had lunch, and promptly flew back. And yet, despite seemingly unlimited demand,
In-N-Out is one of the smallest major fast-food chains in the world, with only 347 locations. There are over twice as many Whataburgers,
almost four times as many Five Guys, and forty times as many McDonalds, just in the U.S. Since it began in 1948, it’s only opened
an average of five restaurants a year – two less than Subway opened in a single day, at
its peak. In other words, In-N-Out deliberately leaves
money on the table, refusing to expand even where huge profits are guaranteed. Why? Profitable, high-margin industries are often,
kind-of… boring. How do you make money selling toothbrushes? Uh, well, you… sell them! Plastic handles with bristles on the end,
as it turns out, don’t cost very much to make, and therefore, have healthy margins. Someone, of course, will try to turn them
into a subscription, make them out of aluminum, oooh, and call it the Youthbrush, but most
of us don’t have a passion for consumer dental products, so the business model is
simple: You hand me a couple of dollars, I’ll give you a rod with some bristles. Things get interesting when companies have
to get creative. When competition is high, or consumer willingness
to spend money low, they have to find some other way to make a profit. For restaurants, it’s all about selling
drinks. With printers, the money’s really in the
ink. And Costco’s low prices? Those are offset by annual membership fees. Selling millions of french fries for a few
cents each isn’t a bad business for McDonald’s, but it’s found something even better: real
estate. While the company only owns and operates 15%
of its restaurants and the rest are franchised, it owns almost all of their buildings and
the land beneath them. Franchisees pay about 8-15% of their revenue
as rent to McDonald’s, who makes money whether they’re profitable or not, and that’s
on top of the normal franchise royalty. After going on a huge shopping spree during
the 2008 recession, McDonald’s now owns more than $30 billion worth of real estate. Not only is its business diversified but much
of that income is tax-deductible. In other words, McDonald’s is actually more
real estate investor than fast-food franchise. Likewise, if you think of In-N-Out only as
a burger chain, it doesn’t make much sense. Why not open more locations? Why not change and perfect the recipes, or
add new menu items? But, if In-N-Out is really about serving a
predictable, familiar experience more than the food itself, opening new locations and
trying new things are huge risks. In-N-Out’s secret ingredient, the thing
it’s really selling is: consistency. Nearly every location has the same, familiar
layout, drive-thru lane, and iconic crossed palm-trees, a reference to the founder’s
favorite movie. Unlike other fast-food restaurants, the interior
is clean, well-lit, and easy on the eyes. Most importantly, the menu is dead simple:
hamburger, cheeseburger, french fries, three flavors of shakes, and the two hamburger patty,
two slices of cheese, double-double. That’s it. To drink, there’s milk, hot cocoa, coffee,
classic and diet Coke, root beer, Dr. Pepper, 7Up, lemonade, and iced tea. Even with a few, secret variations, like grilled
cheese, animal fries, and the Neapolitan milkshake, there’s nowhere near the selection of, say,
a Dairy Queen or McDonald’s, which have about twice as many drinks alone as everything
at In-N-Out. Its menu changes not seasonally, or annually,
but, maybe once a generation. In 1958, bottled sodas became fountain drinks,
Milkshakes were added in ’75, Dr. Pepper, 21-years later, Lemonade, in 2003, and hot
chocolate fifteen years after that. When a fourth beverage size was proposed,
a fight reportedly broke out inside the company. And, in 2018, it closed all 37 locations in
Texas for a full 48-hours when it found buns that didn’t meet its quality standards. The downside of this consistency is that it
can’t respond to changes in the industry. In 2015, McDonald’s was able to turn around
declining sales with its all-day breakfast. And, caught off guard by Chipotle’s success,
many chains have tried capturing that market by introducing more healthy alternatives. On the other hand, by keeping things simple,
In-N-Out can carefully optimize every ingredient in its business formula. Inevitably, new items mean longer lines, confused
employees, and added complexity. The McCafé Coffee, for example, required
each store buy a $15-20,000 espresso machine and train employees on how to use it. At In-N-Out, there are five levels of employees:
Level 1, the janitor and counter handout, 2, for the drive-thru, 3 and 4 who make french
fries, 5, who is allowed to assemble burgers, and 6, the only person authorized to man the
grill, which requires at least 3-6 months of training. Not only does this ensure well-trained cooks,
but it also turns fast-food into a proper, well-paid profession. Level one employees are generally paid more
than minimum wage, and managers make an average of $160,000 a year, with some making well
over a quarter of a million dollars overseeing a single location. It’s not hard to see why they stay with
the company for an average of 14 years. Almost all current and ex-In-N-Out employees
say the same thing: it’s a stressful, chaotic, and, yet, highly desirable job. Everyone, full and part-time, receives 401k
plans, dental and vision coverage, and paid vacation days. Even more impressive, it does all that despite
having some of the lowest prices in the industry. A hamburger, fries, and milkshake costs just
$6.85, about half the price of the same order at Shake Shack. Any other company would, without hesitation,
export this formula of highly-skilled employees, a simple menu, and consistent quality, across
the country, and then, when that worked, across the globe. The fact that it hasn’t is, more than anything
else, a reflection of its values, set 70 years ago in Baldwin Park, California by husband
and wife founders Esther and Harry Snyder. It was the first place ever to use a two-way
speaker system, allowing drivers to place orders while in line. They would eventually open 18 more locations,
but, strictly, only when they could afford to buy the property outright, never on a loan. Principled, thoughtful founders like the Snyders
aren’t all that hard to find, but rarely does the second generation inherit those same
values. Only about a third of family businesses survive
the second generation and another 50% don’t last until the third. In-N-Out is one of the few chains that has
stayed true to its beginnings, despite going through several traumatic changes. When Harry died in 1967, his son Rich took
over, who then died in a plane crash in ’93, after which his brother Guy replaced him,
only to die six years later. Esther then returned to manage the company. Finally, in the riskiest move of all, after
she died in 2006, presidency was given to someone outside the family, Mark Taylor, until
Guy’s daughter, Lynsi, reached the age of 30, when she inherited 50% of the business,
and then almost full control in 2017 at age 35. In-N-Out has seen six different leaders, been
heavily pressured by outsiders to franchise the business, and watched the industry it
helped create change dramatically, and yet, today, 70-years later, any of its very first
customers would feel right at home in any of its 300 locations. It’s current president is the highest-rated
female CEO in the U.S. by employees. And while the company continues growing – entering
Texas in 2011, Oregon in 2015, and soon Colorado – it does so very carefully. Lynsi, still in her 30’s, doesn’t expect
to expand east of Texas in her lifetime, and never in every U.S. state. With so few locations, every grand opening
is a major event – with free, organic marketing and much fanfare. Lines are so long that the company hires off-duty
police officers to manage traffic and flies-in “All-Star” employees – experienced workers
who manage the chaos in long 10-hour shifts. The biggest bottleneck is distribution. Buns are baked daily, milkshakes 100% dairy,
and there are no freezers or microwaves. That means ingredients have to be prepared
at distribution centers – currently in Baldwin Park; Lathrop, California; Dallas; Phoenix,
Draper, Utah; and Colorado Springs. From there, they need to be delivered within
a single days drive to each of their stores – which limits new locations to a roughly
500-mile radius from each distribution center. Whether you’re a fan of Shake Shack, Whataburger,
Five Guys, or McDonald’s, you have to admit there’s something special about In-N-Out. While McDonald’s will always make more money,
serve more customers, and be more widely known, In-N-Out has arguably done something even
harder: keep a legacy alive while staying true to its original ideals over 70-years
and through six generations of leadership. The lesson is: whether in business, life,
or learning, the hardest part is often just keeping a good thing going. Enrolling in a class is easy, but remembering
to actually go and retaining the knowledge, much harder – and that’s exactly how Brilliant
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this video.

100 thoughts on “Why In-N-Out Isn’t Coming to a City Near You”

  1. I don't know whats the big deal about in n out. I live near one and dont find anything special about it. Not worth waiting in a long line for it either

  2. Literally half the time I try to order a mccafe coffee that stupidly expensive machine is broken and the drones are completely helpless.

  3. You know what has gotten more popular… A&W they were close to shutting down then they are popping up everywhere. I've never heard of Whataburger and in and out

  4. Its not 'impressive' that in and out offer health coverage and paid vacation days.

    Literally every single full time employee in the UK gets 28 days paid holiday every year. Every company does it.

  5. In-n-out is so overrated. Went around LA and was disappointed twice. Dry food, cheese on the animal style fries was hard and cold. Fuck off

  6. Yeah I was listening to a podcast from 2014 yesterday and they spoke about In-N-Out in Texas. He said “you can get in but good luck getting out”
    Weird how it was recommended like that lmao, someone was listening.

    The name implies that they just chuck food at you fast so they can get as much money from as much people as possible.

  7. Only downside is I have to go to chick-fil-a for breakfast, because the in-n-out nextdoor is closed in the AM. CA is awesome.

  8. Did I just become an In-N-Out fan boy without ever eating one of their sandwiches or even seeing a restaurant before? Yes I did😎👍 Mad RESPECT to In-N-Out from N⭐C

  9. It's special because they have morals, high integrity, and the love of God. It's a Christian company with Christian Values! Long Live In-N-Out

  10. We have In N Out and it's not as busy as Whataburger, Sonic, or McDonalds. The reason why is only the Awful CA people eat there. Texas people hate it.

  11. The way you narrate the story makes it way more interesting and fun! I am always waiting for the next video you release. And I also appreciate your honesty with the products you advertise.

  12. This is why I love In N Out. I grew up in SoCal and ate there all the time in high school and in my 20s. Funny thing is, in the city I live in, in NorCal, we actually have an In N Out and it is right next to a McDeath and the lines for In N Out are always out on the street..everyone loves In N Out for their small menu and customer service…and you are In N Out.. Yup, my sister worked at In N Out in City of Industry while going to college in the early 1990s and at that time, made $10.50 an hour and worked her way up to being a cook..

  13. My town in Oregon got an In-n-out in 2015. The burgers are good. Fries suck. Often too crowded due to the hype. Not a fan tbh. I get why people are though.

  14. Why TF is McDonald's able to deduct from taxes, when they are a multinational national company which makes hundreds of millions each year?

  15. You definately did your work and were mostly correct, but you where pretty off about the levels. There where quite a few things wrong but i'll just point out a few. We dont have janitors, any and every level is expected to keep the store clean. Level 7 is also not a manager. It's the next step to being one, but not yet. After level 7 you have a hierarchy of managers, and its usually only the store manager who makes up to six figures.

  16. We've got one right around the corner and I don't understand what the big deal is. I mean the burgers are nice enough but the fries are absolute s*** because they don't know how to cook fresh potatoes. And the shakes aren't much better , real ice cream or not.. completely overhyped.

  17. I met an employee off shift at a party once, he’s totally happy working there and actually wants to pursue a career as manager. THIS IS HOW YOU DO BUSINESS. People and Product first. Quality, integrity, and intelligence.

  18. In-N-Out is overrated… it’s a decent burger for a decent price, fries suck, milkshake is okay. I’d rather go to a different burger joint

  19. Why In-N-Out isn’t Coming to a City Near You

  20. There’s 4 in a 30 mile radius. One just 3 miles away. It’s fine every 3-4 months. You guys aren’t missing much.

  21. Am I the only one surprised to hear McDonalds is a franchise?? No wonder theres major differences in quality depending on where its located. I'll actually drive out of my way to go to a further one because quality is so much better.

  22. your videos suck too much to donate to.

    kicking you in the nuts NOT to be a douchbvag…. THAT I'd pay to do!

    Go fcuk yourself, PM……. 💩💩💩

  23. I knew a few classmates that drove 3.5 hours both ways one night across mountain roads to get In-N-Out and be back for class the next day. All because they had a craving for In-N-Out.

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