[Music] I'm going to do a double single, can I get that animal style please? Thank you. In-N-Out really is part of California's culture. You think of great weather, you think of beaches, you think of In-N-Out. In 1948, two burger joints opened in

Southern California, just a 45-minute drive from each other. One would grow into a $25 billion a year empire with over 40,000 locations worldwide. The other now brings in an estimated $2 billion a year in net sales, just over 400 locations in the US, while smaller

In-N-Out has amassed a cult following like no other American fast food brand. McDonald's at one point, you know, they just sort of determined that we're no longer a restaurant, we're a real estate company. In-N-Out said, "No, we're going

to stay who we are, stay in our lane." Even 75 years later, you could still wait in a long line at In-N-Out Burger to order from a menu that is barely changed since its founding. It's always just the affordability and consistency and quality that's like the trifecta. I could

taste an In-N-Out burger and identify it in my sleep. In-N-Out has always kind of been able to keep that "it" factor of like, "There's people at this In-N-Out, I want to go there too." It's like a FOMO thing.

Consumers look at them as the real deal, it's really authentic. Today, In-N-Out still controls every aspect of production, has refused calls to go public, franchise, or even expand too far east. Yet, it remains one of the top burger chains in the US. They are the gold standard of a great

cult brand in the best of ways so how did this family-owned tightly controlled business grow into the cultural phenomenon it is [Music] today? In-N-Out Burger was founded in 1948 when Harry and Esther Snyder opened a small burger stand in Baldwin Park, California.

Harry actually invented the two-way speaker system that created the modern-day drive-thru. Today it's run by the Snider's only grandchild, Lindsay Snyder. When she took over the business in 2017 at the age of 35, she became one

of the youngest billionaires in the world. The company has stayed close to its roots with about 70% of its locations clustered in California. It's estimated that In-N-Out is the ninth largest burger chain in the US by total sales at around $2 billion a year. They

only have around 400 locations and every other player on the has about a thousand or more. We have them having the highest per-store sales among any other player in the burger segment, so it's pretty outstanding what they're able to do with such a small footprint of locations. This

may be due in part to people being more likely to go to In-N-Out as a group versus by themselves at a place like Carl's Jr. 50% maybe more of those occasions they're solo occasions. That's one. If you look at In-N-Out, it's

only about 30 to 35% that are solo occasions. So it kind of goes back to that fundamental aspect of what makes a meal memorable. Often times it's the people you're with. If you're born in California, you're raised on In-N-Out. I'm going to

Do a double single, can I get that animal style please? Grilled and raw onions, I'll add chilies as well. A fry and a drink please. It's not like just going to go get a McChicken or McDouble, or going to get KFC. Boom, the price point is the same.

But the quality and the experience is just more elevated. Sai, who worked at In-N-Out in college, is such a big fan of the restaurant that he and his friends were able to secure a spot as the first customers at one of the chain's new locations in 2024. We're excited to have

you over here in National City to our second location. First meal officially! This shirt I got for free as well as a burger coin. It's pretty rare to come by. It says it's good for one burger, but on eBay they go for like

hundreds of dollars. You're better off just holding on to it and keeping it. It's small print has also made getting a burger from In-N-Out feel like an exclusive experience. Locations are mostly in western states with none on the East Coast. Each restaurant is only a

day drive away from one of its supply centers. A necessity for a company that prides itself on never using frozen ingredients. French fries are also cut in store and each burger is cooked fresh to order. We put In-N-Out to the test and compared it to a favorite burger spot

from the East Coast, Shake Shack. Classic burger, lettuce, tomato, pickles, just like I remember it. I think having vegetables that actually crunch when you bite into them, as far as like a fast food place, you know, it's high quality for me. Shake Shack I feel like tries to be more

Gourmet? I do prefer the Shake Shack burger more. I like that it tastes like a smash burger, it has the crispy edges. I also like the bun more, but it's way too expensive. In-N-Out is basically impossible to beat in terms of price to

quality. I do tend to gravitate a little bit more towards In-N-Out. In-N-Out fries are like, fine, you know, they're not great. They're a little limp. It's more like a nostalgic taste. I would definitely say that Shake Shack has superior fries, not

to mention that because of the little grooves in them, they actually hold a lot more sauce and/or milkshake, depending on what you're into. Consistency is key for In-N-Out. You know, there's not a lot of consistency in this world, and In-N-Out

is a pillar of consistency in some ways, like going home. In-N-Out's menu includes just three types of burgers. When you only have a few things on your menu, people then perceive those menu items to be higher quality and more desirable, unlike other fast food chains. In-N-Out

doesn't offer limited edition items, and new options are rarely added to the menu. When you are publicly traded, you are really operating like at the whim of your investors, who demand growth all the time. Since they're privately held, they don't really have to ever consider

anyone's whims but their own. But it's their not-so-secret secret menu that gives consumers the feeling of insider status. It features options like a Flying Dutchman and the famous animal style. Their menu is a handful of items, and you get to customize it however you want.

you're in and out pretty I mean no pun intended but you really are in and out like pretty quick speak their own language almost like Starbucks did when they came to town and no one knew what a grande was and when people have a secret

language they feel like insiders they're members you know if it's a rainy day and you bring in a child that's 12 and under they get a free hot chocolate this is something they don't promote it's not something that's a limited time offer

now who doesn't love that you can't imagine a McDonald's doing that or a Burger King doing that burger prices at In-N-Out have increased by about 25% since 2020 but prices still remain low thanks to its small menu total control

of its distribution network and not having to negotiate prices with [Music] franchisees a big part of the In-N-Out experience is its employees they have a lot of employees they're never understaffed so you can go to an In-N-Out

and you always know that you're going to get a friendly experience you're going to be helped right away the starting wage for employees is above minimum wage and managers can make well into the six figures and happy employees are noticed by customers in fact In-N-Out employees

consistently rank president Lindsey Snyder favorably on Glassdoor where she currently has a 93% approval rating they have very little turnover turnover costs restaurants a lot of money but they pay so well and they have advancement that people want to work for them

One of In-N-Out's challenges may be keeping control of their brand and legacy over the years. There have been copycat restaurants or places that feature items using the same menu names as In-N-Out. In-N-Out also sued DoorDash in 2015 when the delivery app added the

restaurant to its offerings. The burger chain does not take online orders and it doesn't do delivery. What I think is going to be interesting going forward is seeing how they navigate that particular piece, but we do know that there's a lot of momentum behind digital ordering, the

engagement that consumers have with their sort of Amazonification of their lives. In-N-Out is currently planning its expansion into Tennessee, the farthest east the company has ventured. Nashville area locations are slated to open as soon as 2026. When they open a

new one, it's like pandemonium. You would have thought, you know, Santa came to town. They'll crush it at first because it'll have this 'it' factor, but if it gets much bigger, I'm not quite so sure what will happen. You know, does it just become like

a Shake Shack that's kind of now everywhere? Does it become played out? We'll have to see. After over 75 years in business, In-N-Out has certainly figured out what works for them. I mean, it's kind of counterintuitive to the American business ethos, right? Which is you cut

corners, pass on big prices to the consumers, you treat your employees kind of like widgets. And they've done none of that for 75 years. They've shown that you can be profitable, you can have a quality product, and you can treat your employees well. You can treat your consumers well.

and you don't have to be on the stock exchange, you don't have to be on every corner. I think that's their legacy.

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