by Stacy Perman
On average, it took about five years to reach store manager from entry-level management—and within the company it was viewed as a significant accomplishment. “There was no overnight promotion,” explained Martin. “You had to prove yourself.”
Notably, only store managers manned the grill. Unlike most fast-food chains, the company considered a grill position a highly skilled job. After all, it was the altar upon which the whole enterprise rested. It was a very intricate operation, since every single burger was made to order—a beef patty did not go down until an order ticket went up. It required a tremendous amount of coordination and speed, requiring three to six months just to learn to operate and manage.
Teaching and reinforcing consistency of quality was a real obsession with Rich, and at the University he came up with a number of schemes to maximize the opportunity to do so. The company began sending its top executives to Cal Poly Pomona College, where they took courses in a number of areas such as human resources and sexual harassment. A team of field specialists were deployed to further motivate and train in-store managers; they helped with everything from the proper way to talk to customers and associates to flipping hamburgers. Inspired by college and professional sports teams, Rich began producing a series of training films, videotaping trainees for the express purpose of critiquing their performance.
“Rich was always a leader in communication,” recalled Jack Williams. “And by communication I mean really good follow-up. He developed a package that was clear in what you were expected to do, you were given training to do the job, and then there was always follow-up to see how you were doing it and if you could do it better. If you were strong in one area and not in others, they would work with the people. They gave them direction and motivation. They had an awesome selection process, and his management development and training program was never-ending.”
As a result of his dyslexia, Rich had relied heavily on verbal and visual communication techniques—it was one of the reasons he launched In-N-Out’s Burger Television. The program was a modern, company-wide motivational tool, full of colorful graphics, a vibrant soundtrack, and MTV-style quick cut edits. Similar to a network magazine program, the show broadcast In-N-Out news and events each month to the company. Often a be-suited Rich, with a BTV mic in hand, was shot interviewing various associates. Burger TV allowed the company to reaffirm its basic concepts while rallying the troops and bolstering morale.
Before long, the company launched its own newsletter called The Bulletin. Initially, it was a one-page, black-and-white internal dispatch; distributed to the associates, it offered details about operations and company policy. As the chain grew, The Bulletin expanded to an eight-page color glossy filled with breezy stories about In-N-Out goings-on (store openings and promotions) as well as the associates’ personal milestones (weddings, births, graduations). Although publicity-shy, the chain wasn’t averse to seeing its own name in internal headlines, and one section in The Bulletin was later devoted exclusively to recounting where and when In-N-Out Burger had appeared in the news.
At one point in the midst of Rich’s planning, building, and growing frenzy, he decided to seek the advice of a hard-charging food industry consultant. Given his penchant for surrounding himself with mentors and his desire to constantly upgrade his own management understanding and abilities, it wasn’t surprising that he sought outside counsel—but the consultant’s recommendation took him by surprise. Apparently, the consultant told Rich that if he slashed salaries, In-N-Out could save a “ton of money”; the very idea infuriated Rich. This contradicted the very foundation of In-N-Out’s philosophy and its success. When Rich sourly recounted the story, he said the suggestion was exactly the kind of advice one would get “from a guy who wears a suit and who thinks you don’t pay a guy who cooks hamburgers that much money.”
Like his father, Rich shared in the belief that running a successful fast-food business was not about cutting corners or about purchasing the right equipment. What it boiled down to was people management. Where the two differed, however, was that while Harry had hoped that his associates would work hard at In-N-Out, save their money, and then move on—perhaps even to open their own fast-food businesses (as a few of them did)—Rich had a different vision. As president, one of his chief goals was to build a much bigger footprint for In-N-Out Burger. And his philosophy was, “Why let good people move on when you can use them to help your company grow?” But he had no intention of cutting costs to inflate paper profits.
From the start, In-N-Out paid its employees more than the going rate (associates always made at least two to three dollars above minimum wage) and was an early practitioner of profit sharing. Under Rich, In-N-Out went further, establishing an expansive set of benefits under which part-time workers received free meals, paid vacations, 401(k) plans, and flexible schedules. Full-time associates also received medical, dental, vision, life, and travel insurance.
In fact, after the state of California raised its minimum wage in 1988 from $3.35 to $4.25 (its first increase in seven years), the Orange County Register called Rich Snyder perhaps the only restaurant executive in the state to favor a widespread pay hike. At the time, Rich had already boosted In-N-Out’s starting wages to $6 an hour from $4.25. “If you lose your workers, you lose your customers,” he said. “I don’t know how others do it, but we just try to keep everybody happy that works for us.”
Low-wage employers, particularly in the fast-food industry (which traditionally had both the highest proportion of minimum wage workers and the youngest employees), had long opposed increasing the minimum wage. Chief among their reasons was the belief that it would have a negative impact on employment. Famously, around the time of President Nixon’s 1972 reelection campaign, a number of McDonald’s franchisees were among a group of small businesses that lobbied Congress to prevent an increase in the minimum wage and even sought to have legislation passed that would exempt part-time students from earning the minimum wage. Critics of the move quickly dubbed it the McDonald’s Bill. The fast-food chain’s detractors were further angered when it was revealed that Ray Kroc had personally (and separately) donated $250,000 to Nixon’s reelection campaign.
To put it in further perspective, fast forward to February 2008, when starting pay for all new In-N-Out associates (including part-time associates) reached $10 an hour. Two years earlier, the chain raised its own minimum wage for part-time workers to $9.50. At the time, the minimum wage in the state of California was $6.50 (in January 2007, the minimum wage increased to $7.50). By contrast, Wal-Mart, a company with $375 billion in sales (some ten times greater than In-N-Out’s annual revenue) was paying its full-time hourly workers $10.51, only 99 cents more per hour than In-N-Out was paying its part-time hourly employees.
In-N-Out’s store managers (about 80 percent of whom began at the very bottom, picking up trash, before moving up through the ranks) earned salaries equal to if not greater than most college graduates. By 1989, top store managers earned about $63,000 and were eligible for monthly bonuses tied to store performance. On average, they had been with the chain for about ten years. Accounting for In-N-Out’s team of dedicated managers, Esther once proudly stated, “We’re blessed with good employees, who run the restaurants as if they were their own stores.” Certainly, their high salaries went a long way toward explaining their longevity. Some twenty years later, store managers were pulling in at least $100,000 annually.
It was Rich’s belief that his job was the bottom point of an inverted triangle. He was there to support everyone else in the company. When talking to store managers, he was always careful to refer the shops as “your stores” and never asked them “What store do you manage?” He wanted them to have pride of ownership. Regardless of anyone’s position or length of time with the company, Rich treated everyone equally and as if they were all special. “He really lived the Christian belief of treat your neighbor as yourself,” exclaimed Rich’s good friend Heath Habbeshaw. An ordained minister, Habbeshaw began working
at the La Puente In-N-Out as a teenager with Rich in 1968 and remained with the company on and off until the mid-1990s. “He poured that into his business philosophy and everybody loved him. It made us all work even harder.”
As a result, In-N-Out could also boast one of the lowest turnover rates in a high-churn industry. According to various analyses, in the fast-food world, little more than half of the workforce stays behind the counter for one year or more, with roughly 75 percent of employees staying on beyond six months. After that, the numbers decrease substantially: 53 percent remain one year, 25 percent stay two years, and only 12 percent remain three years or longer. In the case of In-N-Out Burger, its managers maintained an average tenure of fourteen years, while its part-time associates remained, on average, two years.
The result was a corporate culture operating in stark contrast to the competition’s systems of burger flippers and vat fryers, floor moppers and cashiers who put on their paper hats and grease-stained aprons in what society calls McJobs and economists refer to as the requisite churn of capitalism. It was a place where people genuinely enjoyed getting up in the morning and going to work. Rich explained it this way: “We try and maintain the highest quality level possible, and to do that you need good training and good people. That’s why we pay the highest wages in the industry.” He added, “It means we tend to keep our employees longer than at other places, and the reduced turnover helps us maintain consistency in our products.” Notably, the philosophy did not trade on or lead to either higher prices or lower-quality food.
For its part, In-N-Out was selective in its employment process. When hiring, the chain probed a potential candidate for her ability to not only meet but exceed customers’ expectations while working as a team. Interviewers asked detailed questions, zeroing in on the candidate’s view on interacting with others, looking for signs of flexibility and the ability to deal with people holding a spectrum of opinions. Just as Harry frequently told his son, Rich looked at his associates and said, “I believe in you. You are the best.”
The associates were considered the chain’s front lines. For starters, all were required to keep up a clean-cut appearance. All hires were expected to maintain a friendly attitude toward customers (or, rather, “guests”), smiling and looking them straight in the eye. “Times are tough,” he told them. “People are going through a lot. The only smile or friendly service they get might be the one you give them.” Rich felt so strongly about it that he launched a “Smile of the Month” feature on Burger TV to recognize the associate who demonstrated the best smile.
New hires started at the bottom, picking up trash, wiping counters, and putting orders in trays for customers. After proving that they had mastered their current assignment, associates moved up the ladder to filling beverages, dressing burgers, and frying potatoes. The counter associates were instructed to always repeat orders, ensuring that each one was absolutely correct. “They didn’t just hire anybody,” recalled Russ Nielson, who worked part-time at the Hesperia store for one year when he was sixteen years old in 1990. “They wanted to make sure that you had moderate intelligence and were above average. I remember there was constantly an influx of applications all of the time. Everybody wanted to work there. It was good money, and you could eat for free, too.”
Associates were never hung out to dry. They were given specific on-the-job training during slow periods and a considerable amount of feedback on their performance. The point was to make sure that each associate understood his job and how he could do better, and associates were given more of a customer load and more responsibility incrementally and according to their abilities. The elapsed time between starting in cleanup and working the french fry vats could be as long as a year and a half.
Although the work could be monotonous and dreary, four-hour shifts of cleaning ketchup spills or doing nothing but filling soft drink cups with soda, associates were made to feel that they were part of an important enterprise and all were given the opportunity to advance. At In-N-Out, they had a future. There were numerous part-timers who joined In-N-Out for a summer or as an after school job and stayed on, becoming store managers, moving further up the corporate management ranks, and making lucrative careers at the burger chain. Like his father, Harry, Rich expected much from his associates, but in turn he treated them extremely well and continued to offer them opportunities to continue their education and expand their skills and talents.
In order to maintain the chain’s strict quality standards even as it grew, Rich implemented a small army of “secret shoppers.” These undercover customers went from store to store on a monthly basis, making sure that associates were properly dressed and clean, orders were correct, food was presented properly, and even that the right amount of change was given. Sometimes they’d order complex meals to see whether they could trip up an associate. But associates never had any idea until afterward. If they performed badly, they were informed and given opportunities to do better, unless their performance was egregious. An exceptionally good performance was usually rewarded with a small cash bonus. In essence, the secret shopper system was really just a larger-scale variation on Esther and Harry’s frequent store visits. As a former associate put it, “They were mostly looking for perfection.”
Rich earned a reputation as a passionate leader who led by personality. A consummate professional, he always had a smile on his face and seemed to effortlessly convey a deep emotional commitment to In-N-Out that extended to all of his associates. Like his parents, he visited the stores often and chatted up the associates whom he still made a point of knowing by name. His connection to the company was matched by his deep feeling for everyone who worked there. As one of his friends later recalled, “He never acted like the boss. I remember once I made the mistake of calling the workers ‘employees’ instead of ‘associates,’ and he corrected me instantly.” On several occasions, Rich asked colleagues to look up the words “associate” and “employee” in the dictionary. Then he would say, “I’d rather have an associate work for me than an employee.”
Rich set the tone for the company. Each year, he held a company-wide picnic for all associates and their families. The picnic was spread out over two days so that all In-N-Out shifts could be accommodated, and the company chartered buses that ferried the attendees to the picnic grounds. Once there they found an unlimited supply of food (all gratis) and games and activities such as hot air balloon rides. And there were always raffle contests in which TVs, trips, video games, and the latest technological gadgets were available as prizes. There were trips to Knott’s Berry Farm as well as Halloween parties for associates and staffers and elaborate Christmas parties where, on occasion, Rich would truck in real snow, to the delight of the associates and their children.
At the start of each year, Rich threw a black-tie, gala dinner for associates often held in one of the ballrooms at the Disneyland Hotel in Anaheim. The night before the gala, Rich held a kick-off dinner for all of the managers and any associate who wanted to attend. During these occasions, he usually invited a slew of marquee names from a variety of areas—particularly professional sports—to attend. Through the years, Dodgers manager Tommy Lasorda, Lakers head coach Pat Riley, and the basketball team’s executive Jerry West gave motivational speeches to In-N-Out’s top managers. “We want them to share some of their insights,” Ken Iriart, the chain’s vice president of human resources, once explained to the Los Angeles Business Journal. “Some of these people went into good detail about what went into building a winning team, and some of these same things apply to business.”
The gala was a combination fete, cheerleading session, award ceremony, and black-tie affair, all rolled into one. At the dinner, the Snyders handed out the Harry Snyder Award—In-N-Out’s version of employee of the year—to its most outstanding associate. It was the time when new managers were named. Another hallmark of the annual gala was the announcement of the location of the upcoming year’s 100 Percent Club trips. Esther Snyder loved to travel, and a few years
after Rich had begun running In-N-Out, they came up with a special program to reward managers when they reached their goals. Those named to the club (along with their spouses) were awarded first class trips to such places as Hawaii, the Caribbean, Australia, and Europe. During the course of the trips, Rich often invited big-name speakers to continue to inspire the managers.
In his mind, In-N-Out managers were just as important as the executives at any Fortune 500 company. That’s why Rich created the annual gala; it’s why he took his executives to numerous cultural events. At a Christmas time performance of the Nutcracker ballet, Rich required his managers to wear tuxedos. Rich thought they stood shoulder to shoulder with any blue chip manager, and he wanted them to feel similarly.
CHAPTER 13
Soon In-N-Out Burger began attracting serious attention. Over the years, the media-shy Snyders had given very few interviews, and those few were usually with the San Gabriel Valley Tribune, which covered the chain largely as a popular local story. There were of course various mentions and articles in trade publications, but the Snyder family participated only infrequently. Before long, however, the In-N-Out phenomenon had become hard to ignore. In 1989, Forbes magazine featured In-N-Out in a glowing article entitled “Where Bob Hope Buys His Hamburgers,” declaring that the “anti-fad has become a fad.” For the publication that bears the motto “Capitalist Tool,” Rich Snyder not only agreed to be interviewed, but the smiling In-N-Out president was photographed in shirtsleeves and a tie, holding a cardboard box stuffed with a Double-Double and french fries. Although the family did little to encourage further publicity, soon after the Forbes article, a passel of stories about In-N-Out Burger began to appear.