More Than Fare

Every once in a while, Esther Snyder cruises through the drive-through lane of an In-N-Out restaurant to monitor service levels at the burger chain she founded with her husband in 1948. Most cashiers and counter workers at the company’s Baldwin Park operations center quickly learn that the 77-year-old woman isn’t just another customer. But occasionally the restaurant company president catches someone napping.

“The young people have to work here for a while to learn how we do things,” said Snyder, who tonight will become the 18th person inducted into the California Restaurant Assn.’s Hall of Fame. “But customer service is so important.”

According to independent surveys, the Snyder family philosophy works.

“In-N-Out consistently outperforms all the other chains in our overall rating of customer satisfaction,” said Robert L. Sandelman, a Brea-based restaurant industry consultant. “In-N-Out certainly has a loyal customer franchise.”

In an age when competing burger chains are cluttering up their menus with salad bars, chicken sandwiches and pita pockets, privately held In-N-Out has managed to remain profitable by sticking with its original recipe.

When pressed, industry analysts say that they might fault the chain for growing too slowly--it has just 124 locations, including five in Las Vegas.

But industry observers don’t argue with In-N-Out’s decision to stick with the burger, fries and soft drink menu adopted when the first restaurant opened in 1948 on what was then the main road between Los Angeles and Palm Springs.

When Restaurants & Institutions magazine recently surveyed readers, In-N-Out managed to dethrone eight-year winner Wendy’s for honors as the nation’s best burger chain--in the first year that the Irvine-based restaurant qualified for inclusion.

The magazine’s editor in chief called the victory “no fluke” because the chain that operates only in California and Nevada won top scores for food quality, value, service and cleanliness.

What has changed at In-N-Out over the decades are the numbers. The chain that sold 47 sandwiches on its first night of operation in 1948 hopes to cook up 98 million burgers during 1997.

Technomic Inc., a Chicago-based consulting firm, describes In-N-Out as the nation’s 156th largest chain, with $81 million in revenue. The California Restaurant Assn. membership directory sets total revenue at $126 million.

Snyder, whose family rarely talks publicly about their business, says only that “we do better than that.”

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Snyder, who drives each weekend from her Glendora home to Calvary Chapel in Costa Mesa for services--she describes the pastor as “a good Bible-preacher”--has relied upon her religious faith to cope with the loss of her husband, Harry, and later a son, Rich.

When Harry died in 1976, Rich Snyder, then 24, took over as chairman and oversaw an expansion that took the chain from 18 locations to more than 100.

Rich Snyder moved the company’s corporate headquarters to a gleaming office tower in Irvine that was near his Newport Beach home. The company seemed poised for further growth, even as larger competitors saw their profitability stall.

But the Snyder family was jolted in December 1993 when Rich Snyder--as well as a boyhood friend who’d joined the family business and two pilots--died when their plane crashed while approaching John Wayne Airport in Orange County.

Esther Snyder, who had been traveling aboard the aircraft with her son that day, had opted to deplane in La Verne. Earlier this week, she quietly described her son, who was 41 and newly married when he died, as “a good example for everyone. He really enjoyed being with people.”

Customers who look closely at their fare will still find Rich Snyder’s influence. Bible scripture references are printed on the paper cups and hamburger wrappers. “Rich picked those verses,” Snyder said.

Snyder now shares management of In-N-Out with another son, H. Guy Snyder, who took over as chairman when his brother died. Guy Snyder, who had served as vice president, works with a management team that includes several longtime In-N-Out executives, most of whom have close ties to the Snyder family.

Esther Snyder still reports to work at the company’s operations and distribution center on East Hamburger Lane in a Baldwin Park industrial park.

She no longer handles payroll--that task has been computerized--but still hand-sorts bills from suppliers and occasionally finds an error.

“The other day I found a mistake in the phone bill . . . for $62,” she said. “That’s not much, but those kinds of things can add up.”

On Wednesday morning, Snyder was at her second-floor office by 7:30 to deal with company matters, financial affairs at a family-sponsored foundation that deals with abused children and an array of civic and social responsibilities.

“She’s a very active, very involved person,” said Ralph Nunez, director of recreation and community services in Baldwin Park, which in 1989 named its community center after Snyder. “And I can talk to her on the phone, which is unusual for a company that size and for someone in her position.”

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Snyder matter-of-factly links In-N-Out’s continued success to management practices that her late husband instituted: “My husband always believed that employees should share in the profits. He believed that if you performed well on the job, you were worth the extra money.”

In-N-Out, with about 5,200 employees, is a small player in an industry dominated by billion-dollar competitors such as McDonald’s and Burger King. But whereas the chain faces the same employment issues that dog the big players, In-N-Out is willing to pay more to maintain loyalty.

The chain has always paid its counter and kitchen workers more than a minimum wage--Snyder said hourly rates are about $7.50 in some areas where it’s hard to find entry-level workers.

Snyder, who in the early days peeled potatoes and made burger patties by hand, offers a ready explanation for the higher payroll costs: “They’re the ones you see. . . . They take your orders and make your food. They’re so important, so you want to have happy, shining faces working there.”

Managers earn monthly bonuses based on performance, and top executives own a stake in the company.

“We’re thinking about slowing down growth a bit in the next year or so,” Snyder said. “Guy believes we need to have the time to train people properly to run the new restaurants, and he’s probably right.”

Restaurant industry analysts see relatively few holes in In-N-Out’s corporate armor. The company owns most of its 124 locations and prefers less-costly real estate where it can more easily turn a healthy profit.

The company also has long-standing relationships with its suppliers: For example, its hamburger buns have been baked by the same company since 1954. And it handles truck maintenance and distribution from its complex in Baldwin Park.

“There are only a handful of family-owned, regional players like In-N-Out that are managing to do well,” said Ron Paul, a Chicago-based restaurant industry consultant.

Sandelman, who tracks fast-food restaurant usage, tied In-N-Out’s success to correctly identifying just what its customers want.

Order a Double/Double, fries and a shake during lunch and the wait can easily drift beyond 10 minutes. And good luck finding a seat.

But despite the lengthy wait, “regular customers give the chain remarkably high ratings when it comes to speed of service,” Sandelman said. “It’s as if they are judging on their expectations of how long it takes to make good food versus using a second hand on their wristwatch.”

A Southern California phenomenon for most of its existence, In-N-Out turned to Northern California and Las Vegas in the early 1990s. The company has plans to open about a dozen more locations, but growth will be limited to California and Nevada, Snyder said.

The company also has a thriving mail-order business for In-N-Out apparel, bumper stickers and licensed goods. And it has a fleet of seven burger wagons that fan out to cater birthdays, corporate parties and other events.

Bob Hope, who bought his first In-N-Out burgers while driving to Palm Springs during the 1950s, recently hired a mobile kitchen for a private party.

And when the urge hits when the burger wagon isn’t around, Snyder said, “he still buys his hamburgers at our stores in North Hollywood and Thousand Palms.”

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At a Glance

Company: In-N-Out Burger

Headquarters: Irvine

Chairman: Guy Snyder

President: Esther Snyder

Business: Fast-food chain

Status: Privately held. All restaurants are company-owned.

Number of restaurants: 124 in California and Nevada

Employees: About 5,200

1996 sales: Estimates range from $81 million to $126 million

Source: In-N-Out Burger