When the pandemic upended production at U.S. slaughterhouses this spring, the price of ground beef shot up 26% and chains using fresh meat like Wendy’s stopped serving burgers at many locations. But In-N-Out Burger’s owner and president Lynsi Snyder didn’t dare turn to frozen, and instead happily swallowed the price.
“Those things didn’t even enter my mind,” the 38-year-old Snyder laughs. “Quality is way too important and embedded in who we are. We are not going to compromise now.”
Indeed. Despite the pandemic, In-N-Out is moving ahead with business as usual, including hiring and expansion plans. It has opened eight new locations so far this year, including two in Colorado that open Friday. It’s the first time the iconic burger chain is entering the state.
One big reason why In-N-Out has done so well as much of the restaurant industry struggles to survive is because of its popular drive-thrus that often have long waits, especially in these past few months. It’s also been protected by the fact that it’s privately-owned by Snyder, who is worth an estimated $3 billion, thanks to her stake in the chain. Because of all this, In-N-Out has been able to add jobs while many restaurants are furloughing or laying off workers. In-n-Out has hired new employees at all 363 locations this year, including 130 in Colorado starting at $14.50 an hour.
“We bend over backwards to try to do as many things behind the scenes to continue business as usual,” Snyder says over the phone from Southern California, the first interview she has given since speaking to Forbes in 2018. “It obviously has not looked like business as usual with masks and nearly empty dining rooms.”
In-N-Out plans to open up another five locations before 2020 is over. If it all goes according to plan, it will be one of the biggest years of expansion in Snyder’s now decade at the helm of the 72-year-old burger chain known for barely moving beyond Southern California.
The closely held chain doesn’t reveal its financials, but sales, estimated for 2019 at just under $1 billion by research firm Technomic, have remained strong. The pandemic, Snyder says, has reinforced key In-N-Out strategies that are otherwise rare in the fast food industry: no debt, leases or franchising, along with a tight grip on the supply chain. “We have a way of doing things that doesn’t always look like everyone else, but being confident and stubborn with the way we’ve done things has worked out,” Snyder says. “There’s definitely been a lot of opportunities to make things easier, but that’s not that’s not our style.”
The chain is well-positioned to come out of the pandemic even stronger, says Damon Chandik, the head of restaurant investment banking at Piper Sandler. “In-N-Out is definitely a business that’s in a class by itself,” Chandik says. “They’re able to absorb shocks better than some other businesses in the restaurant industry, which is really hurting right now. There will be less competition for employees and more customers per restaurant chain because there will be less chains out there.”
While In-N-Out’s wildly loyal fans see reasonably priced burgers served with a smile and cutesy red and white palm trees, those who have followed the chain’s nearly eight decades of history know the Snyder family has experienced its share of darkness, and Snyder says that has helped her keep focused in 2020. Snyder’s grandparents opened the first location in Baldwin Park, California in 1948 with a nifty two-way speaker box connected to the kitchen, creating an early drive-thru window.
Their son, Snyder’s uncle Rich, then died in a Christmas time plane crash while running the chain. His older brother, Snyder’s father, took over and was chairman for six years, even as he struggled personally with addiction. He died in 1999 of heart failure, just after 17-year-old Snyder started working at her first In-N-Out location in Redding, California, separating leaves of lettuce and working the register.
“I was brought into the company from tragedy,” says Snyder, who became the sole heir when her grandmother died in 2006 and took over as president in 2010. “It’s something that unfortunately our company is familiar with, going through tough times. There’s strength in us just knowing that we’re going to go forward and weather the storm, like we have in the past.”
In Snyder’s ten years of leading the celebrity- and chef-obsessed chain, she’s nearly doubled sales and added more than 100 locations, moving the historically slow-to-change chain into new markets like Oregon, Texas and, this month, Colorado. In addition to the first two locations in Aurora and Colorado Springs, another around the Denver area will open before the end of the year. The pandemic hasn’t delayed the construction or openings, which were first teased in Forbes in 2018, and the drive-thru locations don’t have any pandemic-related design changes.
In-N-Out only expands once it has infrastructure already in place for a new location, unlike most restaurants, which work to grow into distributors as they open. Now that In-N-Out’s new distribution center in Colorado is up and running, it puts locations like Idaho and New Mexico within a day’s drive — an In-N-Out requirement since it only uses fresh beef and delivers to locations from its center daily. In a fast food industry rarity, In-N-Out employs its own butchers, and all hamburger patties are boned and ground from whole chuck pieces.
An In-N-Out opening can draw customers to camp out for hours, and the rumor mill is strong online. There have been recent, unconfirmed reports of a new Stockton, California location, in addition to a fourth Oregon location, which is looking like it will be the first in the Portland area, plus a new location in Utah, close to the Idaho border, which is setting off other rumors of moving into Idaho. To all of this, Snyder laughs, but confirms some hints: “We have not denied that we will be in Idaho one day. Portland, we definitely have sites that we’re working on, and those stores will be in the near future.”
No doubt, the pandemic and a cheap debt market is creating more opportunity for deep-pocketed owners like Snyder, who based on her 99% ownership of In-N-Out is worth an estimated $3 billion. Others like Neal Aronson’s Inspire Brands are making big moves, like acquiring Dunkin for $11 billion.
But In-N-Out, she’s quick to say, isn’t rushing to buy cheap locations all over. “We really have been working on spacing out our openings through the year and getting a lot of sources in the pipeline so we can just be ready,” says Snyder. “We try to keep it at a nice, steady pace. We’re not going all-out building stores everywhere.”
That steady strategy also extends to how Snyder has barely touched In-N-Out’s menu, though a sugar-free ginger beer developed with Coca-Cola will be added in 2021. In addition to how In-N-Out treats its workers, who consistently rank In-N-Out as a top employer in the restaurant industry, which according to the most recent Bureau of Labor Statistics data is still down 2.3 million jobs from its pre-pandemic peak in February.
In-N-Out has yet to furlough or lay-off a single employee, in contrast to chains like privately held Waffle House, which furloughed most of its 40,000 workers this spring after closing 700 locations and seeing sales drop 30%. At the time, In-N-Out replenished sick-time banks, guaranteed paychecks for associates even if working hours were not available, and Snyder gave recognition bonuses for all associates working in facilities.
“We owe it to them,” says Snyder. “We’ve tried to go above and beyond what some of the people around us are doing. Usually we don’t look to the left or the right. I always say we go forward and we do what we do, but this is a time when we haven’t been in this place before. We really were looking and saying what is happening out there to people, and how can we take care of them, how can we do better?”
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