In-N-Out Exec's Death Raises Succession Questions

By GREG HERNANDEZ

Dec. 9, 1999 12 AM PT

TIMES STAFF WRITER

The second brother to run In-N-Out Burger has died unexpectedly, leaving the company once again in the hands of its founding matriarch and raising questions about how heirs plan to keep the popular fast-food chain a family business.

H. Guy Snyder, 48, chairman and chief executive of the Irvine chain, died in his sleep Friday evening in his Lancaster home, apparently of natural causes.

“It’s a tragic loss not only to the company and the family, but to the community at large,” said Jacque Ellis, chief executive of the Irvine Chamber of Commerce. She praised Snyder and the company for being “tremendous supporters in our community and many others as well.”

Six years ago, Snyder’s younger brother, Richard, 41, and two other In-N-Out executives were killed when their private plane crashed near the Santa Ana Auto Mall. Two crew members also were killed.

Now, as in the aftermath of the 1993 plane crash, co-founder Esther Snyder, 78, has assumed control of the 140-store chain she and her husband, Harry, started in 1948. The only family member now working for the company is Mark Taylor, the husband of one of Guy Snyder’s daughters.

Finding a competent successor, even someone outside the family, is now critical for the company, said Lee Hausner, a family business consultant at Doud/Hausner in Glendale.

“When [Richard] died, that was a dramatic example of not having a succession plan,” Hausner said. “Now with another brother having died, succession is a real challenge for that organization.”

Companies in similar situations often have turned to an in-law or a non-family executive, who reports to a board of directors with family members on it, Hausner said.

“You want the person who is the most effective for the business because the business is the golden goose for the family,” she said.

Family-run businesses are in for tough times if they don’t have succession plans ready, experts say.

In-N-Out has remained private since its inception, although prospective buyers are plentiful and some analysts say a sale is inevitable.

“When something has become a family empire, handing that off is something not even discussed,” said Jodi Waterhouse at the University of San Diego’s Family Business Forum, which advises family-owned companies. “They are looking to pass on the business to the next generation.”

The chain’s concept of offering burgers, fries and drinks has not changed in five decades. With little advertising, it has grown largely by word-of-mouth and through a cult following, said Hal Sieling of Carlsbad, a restaurant industry consultant.

“They also are one of the better-run restaurant concepts because they pay their management and employees pretty well, do a good job of training and have a good retention record for employees,” Sieling said.

The company, which does not make its financial results public, was estimated to have $146.1 million in sales last year, a 7% increase from the previous year, according to Restaurants & Institutions magazine.

In-N-Out is an anomaly in the fast-food industry, said Bill Carlino, a managing editor of Nation’s Restaurant News, because “people will gladly sit 15-20 minutes at the drive-through window.”

“What the concept does is bring back the more personalized touch to the quick-service segment where everything is sort of mass-produced,” he said.

Some industry experts say the chain won’t remain family-run much longer.

“The scenario I could see is maybe a sale, and I’m sure there would be no shortage of potential buyers,” Carlino said. “People would love to have a concept like that in their portfolio. It’s a manageable size and it generates high volumes.”

But restaurant consultant Randall Hiatt in Irvine said In-N-Out has a very solid operations manager in Carl Van Fleet.

“I wouldn’t expect any change in the immediate future with the mother still active,” said Hiatt, president of Fessel International. “But they are going to miss a whole generation there in the transition in a family-run business, which is a real tragedy.”

Still, he recognizes that family businesses are much tougher to keep intact as they grow and as a greater number of heirs come of age.

“Down the road, you might have grandchildren and more people with their finger in the pie, and you eventually get diverse opinions,” he said. “So remaining private might change eventually.”

When Harry Snyder died in 1976, Richard Snyder took over the company at the age of 24. At that time, the chain had only 18 outlets. He guided the family business through competition with fast-food giants and built the company to 93 locations by the time of his death.

Under Guy Snyder, the chain has continued to grow, expanding to Northern California and Las Vegas.

Snyder is survived by his mother, three daughters and five grandchildren. Funeral services will be private, the company said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

In-N-Out Burger at a Glance:

Business: Fast-food hamburger chain

Headquarters: Irvine

Operations: 140 locations in California and Nevada

O.C. operations: 17 locations

Leadership: President, Esther Snyder (co-founder)

Ownership: Family-owned company

1998 sales*: $146.1 million

* Estimated