In Calif., Internal Lawsuits Served Up at Burger Chain
Monday, January 30, 2006
LOS ANGELES -- There's trouble brewing in the best burger chain in the West. From the company that invented the drive-through, canned the carhop and to this day still shuns microwaves, freezers and warming bins, an in-house power struggle is causing consternation among the cognoscenti of a good greasy meal.
Over the past month, a board member and In-N-Out Burger Inc. have traded lawsuits in Los Angeles County, each side accusing the other of planning to destroy the chain's winning formula that has consistently placed its 202 restaurants at the top of nationwide fast-food surveys.
"Yeah, I heard about the court cases," said Larry Carl, a 47-year-old trucker digging into one of In-N-Out's signature items, a Double-Double, "animal style," (two beef patties, two slices of American cheese, fried onions, sauce, lettuce and tomato). "I just hope they don't monkey with the menu."
Named during a more innocent time, In-N-Out was started by Harry Snyder, fresh out of the Army, and his wife, Esther, in 1948 in East Los Angeles. The nascent car culture of the time prompted the Snyders to eschew tables and chairs and install a two-way squawk box for orders. Californians in the postwar world liked the modern feel of fast food. It was here that Dick and Mac McDonald opened their eponymous burger joint and that, with a push from Ray Kroc, spread around the world.
In-N-Out grew slowly, taking three years to add a second store. The Snyders focused on quality and also paid employees more than most fast-food outlets, a policy they continue to this day. Now, store managers make more than $90,000, part-time employees pull in at least $8 an hour and full-time employees have access to a 401(k) retirement plan. In-N-Out was one of a few fast-food chains to pass muster in Eric Schlosser's bestseller "Fast Food Nation," about America's obsession with junk food.
From the beginning, the Snyders bucked most of the fast-food trends. As McDonald's and other chains embraced franchising, the Snyders kept In-N-Out in the family. As other chains turned their restaurants into food assembly lines with everything pre-made and the emphasis on speed, In-N-Out prided itself on making things fresh -- including french fries. When others used cheaper shredded lettuce, In-N-Out ignored the trend. When health-food fads emerged, In-N-Out consciously stayed in the dark ages. There's no salad bar, no chicken burger and no veggie pattie. Excluding beverages, the menu has just four items -- a hamburger, a cheeseburger, the vaunted Double-Double and fries.
The Snyders had two boys, Richard and Guy, both of whom worked in the business. But Richard died in 1993 in a plane crash, and Guy died in 1999 of a prescription drug overdose, leaving Esther Snyder's granddaughter, Lynsi Martinez, 23, the sole surviving direct descendant.
In a lawsuit filed earlier this month, a board member, Richard Boyd, alleged that the young heir is maneuvering to oust him so that she can accelerate her control of the firm and speed an expansion that will destroy the quality of its burgers. In a countersuit, In-N-Out executives say that Boyd used company funds and its contractors to work on one of his houses. In December, the family released a special video message to its employees showing Martinez sitting with her 86-year-old grandmother. "We're in good shape," Mark Taylor, In-N-Out vice president and Martinez's brother-in-law, told employees. "Don't believe everything you hear."
Joel Kotkin, who has written extensively about Los Angeles, said fans of the burger chain were worried the suit could open up In-N-Out to takeover offers.
"In-N-Out is one of those iconic Southern California cuisines," he said. "Every city loves to have something that is uniquely its. The problem with globalization is that you wake up in Munich and you think you're in Milwaukee. In-N-Out is unique because it's from someplace. You'd hate to see some jerk from Indiana take it over."
Kotkin also said that In-N-Out is a throwback to when Los Angeles was a hamburger town. These days, with a population 47 percent Hispanic, Los Angeles is proudly a taco town. Indeed, if anything defines L.A. fast food now it's taco trucks, not burger joints.
Nonetheless, nothing seems to have diminished this city's passion for In-N-Out. Bob Hope was a fan. And In-N-Out's cookout trailers are a fixture at Vanity Fair's annual post-Oscar party and at the Tournament of Roses parade. When Andrew Ramirez, an Army sergeant who was held captive for 32 days in Serbia in 1999, was released, his first request was for a Double-Double. His mother, Vivian, carried two of them, with fries, to his base in Germany.
In-N-Out has operated "a bit like a cult" in its secrecy and with the devotion it has engendered among discerning carnivores, said Ron Paul, president of Chicago-based food industry research and consulting firm Technomic Inc.
Instead of a secret handshake, In-N-Out has a secret menu, handed down generation to generation. Regulars know if they don't want a bun to ask for "the Protein," a burger in a lettuce sandwich. The "Air Burger" is bun, lettuce, tomato, cheese, sauce and onion but no burger.
Paul said the company is unusually tight-lipped about releasing its revenue, sales figures, employee numbers and other details. It places biblical references on the bottom of its cups and french fry satchels. "If you ask them what time it is, they tell you to go across the street and ask somebody else," Paul quipped. Even within the company, store managers aren't told how many hamburgers they sell.
Technomic's annual survey in 2005 estimated that each In-N-Out store took in $1.75 million -- fourth highest among American fast-food joints -- not bad considering McDonald's, at No. 3, serves breakfast.
"Their secret is that they haven't tried to be all things to all people," said Bob Sandelman, the chief executive of Sandelman & Associates, a food-service research company. "They haven't tried to say they have items that are healthy and nutritious. They don't have a kids' menu. But they do have good burgers." This year, he said, In-N-Out has again won his firm's annual nationwide survey of about 90,000 customers of 70 fast-food chains.
Kotkin said the spat reminded him of another L.A. culinary icon -- the Armenian-run Zankou Chicken chain -- that was devastated in 2003 when three members of the owning family died in a murder-suicide. "It just reminds you," he said. "Things could always be worse."