Why In-N-Out Works

 

Memories, laced with nostalgia, transport me back to the midsummer nights of my high school years…

Dusk paints the sky, a lowered pale blue pick-up truck, windows rolled down, the cool desert air pleasantly mingling with the heady scents of grilled onions and french fries…

”Will you be eating that in the car?”

“Yes….yes, I will…”

I have been a fan of In-N-Out Burger for virtually my entire adult life.  Even today, In-N-Out is one of the few places that serve “real” food at a real value.  Sorry, “big three,” but the Double Double is the undisputed champion, the king, the be-all end-all of burgers, at least for this California native. (At this point, I would like to give honorable mention to Five Guys and Habit Burgers for their top-ranked contenders!)

I could go on and on about what makes In-N-Out special in the restaurant kingdom:  the attention to quality, the culinary wonder that is the Double Double, the fries made from real potatoes, the friendly service, the Southern California heritage, the impeccably clean interior, etc.  But, today, I want to discuss what makes In-N-Out special from an engineer’s perspective.

Simple Menu = Two Flows

The menu offering at In-N-Out is comprised of four product categories: burgers, fries, shakes and drinks. Out of the four categories, only two (burgers and fries) require any real processing at the point of purchase.  Practically speaking, this means that there are only two assembly flows to consider for the purposes of facility planning and process optimization.  Compare this to the challenges a kitchen designer faces at concepts with diverse menus like Chili’s, or The Cheesecake Factory!  Even McDonald’s is considerably more complex.  Two flows at In-N-Out…simple.

This exceedingly simple menu has other advantages besides just being easy to read.  Allow me to elaborate on a few of these, from the perspective of someone who appreciates a well-engineered kitchen.

Freedom to Optimize

The kitchen designers and R&D team at In-N-Out know that an improvement in either of these two primary flows will pay big dividends on the overall performance of the system.  Therefore, they have the freedom to focus significant intellectual and financial capital on the optimization of those processes.  That is why you see all manner of slick workstation details at In-N-Out that are found nowhere else.  To wit…the hinged fry dump, the bun toasting “fingers”, the ultra high-efficiency fryer bank, the seriously well-thought-out ingredient locations, etc.

Dynamic Imbalance

The arch nemesis of kitchen designers everywhere is rarely named, but easily recognizable: dynamic imbalance.  This is a situation that arises when various processes with different flows, cycle times and requirements interact with one another in a random pattern.  The problem is more acute when the disparate processes occur on a relatively infrequent basis.  In other words, the more the product mix is evenly spread across unique menu items (with different process flows), the more imbalances you will have.  The results are excessive movement between stations, products waiting on resources, bottlenecks, under-utilized resources, disorder, and lack of coordination between stations.  Completed menu items will often wait several minutes for other items on the same ticket to be prepared, preventing the ticket from being “sold.”  While bottlenecks flare up randomly throughout the kitchen, other resources will sit idle, which will soon also become bottlenecks themselves, as the precocious product mix makes its way through the kitchen.  Higher volumes can mitigate the problem, as velocities become great enough to justify the dedication of resources and staff to specific product flows.  But, for most operations, they simply cannot afford to dedicate resources to specific product flows.  So operators are forced to move from flow to flow in order to execute the menu, in a constant state of imbalance.  First, it’s the salad station “in the weeds”, then it’s the grill, then the fry station, and so on.

In manufacturing, the goal is to “line balance” so that you can increase the utilization of all resources, and therefore the throughput capacity of the assembly line.  This short video is a good example of what an imbalanced line looks like, and how to go about balancing it:

As you can see, when you have one flow, and a predictable production schedule (as in a manufacturing plant), it is fairly easy to balance the line, partly because you can calculate the workload at any station. In a restaurant, however, the production schedule is largely unknown (whatever the customer orders when they walk in the door), and, therefore, it is not possible to know the work content at any one station.  The volume and mix are both unknowns, with mix being the more difficult of the two to forecast and deal with, especially when the mix is spread across a diverse menu.

Utilization

This is where the advantages of the simple, two-flow In-N-Out kitchen become apparent.  The processes are predictable and similar, allowing the operators to get into a rhythm, a “zone” of productivity.  And, although, you still may not be able to accurately forecast the volume, the mix is really not a significant variable, because almost everybody orders a sandwich and fries!  This allows In-N-Out to have a more balanced system that fully utilizes all available resources.  This is why everyone looks so busy at In-N-Out.  No one is waiting on someone or something else to finish before they can do their job.  The system is balanced.

Speed of Service

Granted, the speed of service at In-N-Out is not as fast as some of their competitors, due to the fact that they make everything to order.  However, the speed of service is predictable, and reasonable for a QSR.  You rarely will be surprised by how long it takes to get your order.  For example, you can usually count the number of cars in line and assume no more than 1-minute wait time for each; it’s usually a little faster.  This is because In-N-Out has a very stable average window time of approximately 1 minute or less.   The window time is stable because the system is in balance, and operating within its throughput capacity limits.  Try it next time you go to In-N-Out, and let me know if the simple formula of, cars = wait time in minutes, works for you.

Throughput

The throughput capacity of an In-N-Out platform is very high.  The manager can increase the capacity by simply deploying more grill/assembly stations as demand dictates.  And, the development team has the ability to build even higher capacity buildings simply by incorporating more redundant stations.  In many kitchens, figuring out how to increase capacity is very complicated, and often requires a complete reengineering exercise to figure out how to do it, without destroying productivity and speed.

Other Advantages

Training – The simple menu means it is also much easier to train their employees when it comes to menu mastery.  A higher percentage of training time can, therefore, be devoted to service, attention to detail, and teamwork.

Service Quality – Operators can focus on service and execution, as opposed to jumping around from station to station, waiting on a piece of equipment, or deciphering build cards.

Quality Control – From what I understand, In-N-Out is vertically integrated all the way up to the producers who supply their food ingredients.  They have complete control over the quality of all the important aspects in their business.  This may not be possible with a more complex operation.

Scheduling – Given that there are few positions and everyone can be easily cross-trained, it is much easier to create an effective labor schedule than it might be in an operation with all sorts of different departments, and skill-set requirements.

Waste – As there is only one size of patty used for the sandwiches, it is very easy to consume the product off of the grill without having to waste it.  There is no need to come up with sophisticated holding techniques or forecasting formulas.  (Actually, the correlation between number of customers in line and patties on the grill is very high, which may make it feasible to implement a very simple but effective loading rule for the grill!)

Summary

In-N-Out is one of my favorite restaurants to eat at, and also one of my favorites when it comes to smart kitchen engineering.   The simple menu creates a host of advantages that In-N-Out has successfully leveraged to become one of the most successful restaurant concepts in the business.  In closing, when R&D at your organization comes up with the next big win on the new product news front, you may want to think of In-N-Out and what it means to be truly the best at just a few things…

The Productivity Paradox

Uncertain Times

These are indeed perilous economic times. The list of indicators is staggeringly broad and deep: real estate, stock markets, consumer confidence, federal and state budgets threatening insolvency, volatile commodity pricing, and the latest sovereign debt fears. With our economy driven largely by consumer spending (at nearly 70% of GDP), it is no revelation that restaurant companies are finding it increasingly difficult to grow and finance their businesses. Clearly, a competitive advantage is needed to gain a foothold in this rocky economy.

Zero-Sum Game?

In the eyes of many proprietors, one can either compete on service or cut costs, in a mutually exclusive showdown of sorts. One of my clients memorably labeled this dichotomy, “high touch vs. high efficiency.” On the one hand, only impeccable service can maintain the customer’s fickle interest when expectations are sky-high for their exceedingly scarcer dining out occasions. However, if service comes at the expense of profits, one can only wonder if a restaurateur is engaged in a battle that will surely drain the coffers all too quickly. Besides, profit is the lifeblood of all business. Perhaps, an aggressive cost-cutting campaign is in order, as a means of riding out the storm until the consumer fully returns, pockets flush with discretionary cash?

New Calculus Of Productivity

The traditional zero-sum game of service vs. profits, as a tradeoff, is outdated once you accept the new math of productivity. Productivity, simply defined, is the measure of output as a ratio of input. So, as you improve productivity, the amount of stuff (food, service, sales) you produce per unit of input (labor hour, inventory, square foot) increases. Only productivity improvement enables a restaurant concept to simultaneously improve service and cut costs, thus shattering the aging paradigm of service or profits. Or, more plainly, you truly are able to do more with less.

Sources of Productivity

Productivity is manifest in many forms: labor, equipment, dining tables, storeroom, food – basically any resource where you can identify a tangible output. A systematic process improvement initiative, enabled by classic process analysis and work design techniques, can and will lead to significant improvements in productivity in any of these areas. By only eliminating the non-value-added components of a resource or process, you are able to reduce the input costs without sacrificing the quality and quantity of output. Alternatively, saved resources can be reinvested to achieve a higher level of service.

Sustained Competitive Advantage

“In business, I look for economic castles protected by unbreachable ‘moats’.”
– Warren Buffett, investor and CEO of Berkshire Hathaway

In Buffett’s analogy, the wider a business’ moat, the more likely it is to stand the test of time. Given a successful combination of service, food and environment (the castle), only productivity can maintain an enduring competitive advantage (the moat.) Furthermore, a continuous process improvement culture is a necessary component of a long-term competitive strategy. It is important to continuously build upon productivity improvements in order to continually widen the moat. The productivity paradox, or doing more with less, is a viable alternative to choosing profits over service (or vice versa.) Restaurant concepts that embrace the productivity paradox are well suited to grow and prosper in any economic climate, but especially when times are tough.