In-n-Out: A model of operational prowess

I don't understand why I never read a case about In-N-Out in business school.  In-N-Out is my favorite and most frequented dining establishment because it's the best burger you can find for under 2 bucks.  Unlike lousy McDonald's or Burger King food, In-N-Out food is made fresh.  The lettuce and tomato are still cold when the burger hits your mouth, unlike lesser chains who rarely include fresh veggies because it interferes with their nasty microwave production process.  And yeah, the fries get soggy if you don't eat them right away, but that's probably because they aren't dipped in radioactive preservative coating like most places.  I love McDonald's fries as much as the next man, but what are those things?

But the value --high quality for low price--isn't the only reason I keep coming back for more.  The real reason I'm in love with In-N-Out is that it is a model of operational efficiency.  They save so much money from running a tight ship that they can afford to give amazing food away at outrageously low prices.  They even have enough slack left over to do ridiculous things like have someone cut the potatoes, lettuce, and tomatoes right in the restaurant, or paying their employees way more than they probably have to, which everyone knows isn't the cheapest way to go.  So what's their secret sauce?

1)Utilization.  When was the last time you went to In-N-Out without having a line both inside and at the drive in. That's right.  Never.  Sure, they have the dinner and lunch time rush.  Bu if you show up at 3:00 in the afternoon or 9:00 at night, there is still a line.  In-N-Out does this by offering such a high-value menu that people keep coming, and they restrict the number of stores in a given geography so that existing stores are always maxed out.  High utilization means the fixed costs of running the store can be spread across more customers, which means instead of paying 30 cents to keep the lights on per burger, you are only paying 5 cents at In-N-Out, which is why it's cheap, which is why you keep coming back for more, which is why utilization is so high.  A virtuous cycle.  Yeah, Baby.

2)Low variability.  Count the things on the menu at In-N-Out.  Burger, Cheeseburger, Double Double.  Fries, 3 shakes, drinks.  None of these "healthy options", salads, fish sticks, chicken sandwiches, and 27 permutations of the same burger.  No 14 varieties of coffee and weird desserts.  That means they can train the team to churn out a gazillion burgers and fries, and the kitchen can be optimized for a single track system.  Simple menus also mean they can afford to make everything fresh, because they know that every customer is going to order . . . a burger, which means they won't have to go back to the freezer, find the rarely ordered nasty menu item, and nuke it for you.

3)Run the restaurant like a six sigma factory. Have you ever noticed that someone repeats your order back to you 3 times at the drive in, and twice inside?  That keeps the order errors down, which speeds up the assembly line and reduces waste from orders that were created wrong.  Have you seen the little clock by the drive through that tells them how long that customer has been waiting?  It starts flashing around 3:00.  Have you noticed that when the line is long at the drive through, they have someone come out and meet you with a portable computer to take your order?  This not only makes you feel like the wait isn't so bad, it also allows them to put more burgers on the grill and fries in the fryer so you don't wait.

Go on, head down to your local In-N-Out and revel in the efficiency while you stuff your face with a double double and animal fries.  Your arteries might not thank you, but it's worth it.  And if I ever interview you for a job, you'll do a lot better at my In-N-Out case interview than the competition.