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In-N-Out Burger Jeff Tolonen Tom Sobelman Why In-N-Out? Everybody likes In-N-Out. Part of Southern California Culture. It’s a thriving “Mom & Pop” chain in today's corporate dominated “Mc World”. In-N-Out is always crowded and for some reason people don’t mind waiting.

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in n out burger

In-N-Out Burger

Jeff Tolonen

Tom Sobelman

why in n out
Why In-N-Out?
  • Everybody likes In-N-Out.
  • Part of Southern California Culture.
  • It’s a thriving “Mom & Pop” chain in today's corporate dominated “Mc World”.
  • In-N-Out is always crowded and for some reason people don’t mind waiting.
  • They have a unique business model.
in n out burger3
In-N-Out Burger
  • Family owned
    • California, Nevada, Arizona only
    • Accountable to customer, not shareholder
  • $1.8 million average annual revenue per restaurant (2005)
    • Rivals top chains: McDonalds & BK
  • Limited menu (Burgers, fries, sodas, shakes)
    • Consistent
    • McDonalds has added 37 items since 1955
  • Made to order business model
    • No freezers, heat lamps, or microwaves
    • Produce delivered fresh every other day
inventory management
Inventory Management
  • Delivered fresh
    • Daily or every other day, depending on location
    • Minimize holding cost
  • Own distribution system
    • Private butchers, warehouses, truck lines
    • Must improve system to expand beyond west coast and maintain strategic position
  • EOQ & ROP
    • Too hard without insider info: cost per order, vendor info, holding cost, etc
side note about in n out
Side Note About In-N–Out
  • What happened after I emailed In-N-Out Corporate?….NOTHING!!!
  • The response to my email:

Dear Mr. Tom Sobelman:Thank you for taking the time to contact us.  Your project sounds exciting!As you may know, In-N-Out Burger® is privately held and family operated.  As such, the information you requested is not published.  However, we sincerely appreciate your consideration, and wish you success in your future endeavors.Thanks again for your e-mail, and for your interest.Sincerely,Jeff DreherCustomer Service Representative

what it takes to get a call from in n out burger corp
What it takes to get a call from In-N-Out Burger Corp.

Customer Service @ In-N-Out,

I’m finding your response, below, a little confusing. If the information that I was looking for was published- I wouldn’t have contacted you, rather, I would have had it already. I would much rather prefer a “yes we can” or a “no we can’t”. I am not competitor nor am I requesting specific information.  I find the fact that you wouldn’t have time to talk to a student from a school of 35,000, that is central to 2 of your San Fernando Valley locations, difficult to fathom. If In-N-Out is unwilling to speak to me- that’s fine, however, I would like a less condescending reason as to why. Is it because the information that I am requesting is too sensitive is it because In-N-Out doesn’t have time for students? 

Tom Sobelman

Operations Data Analyst

Care Level Management

Mobile: (818) 665-9851

Office:  (818) 595-8251

E-mail:  tsobelman@carelevel.com

product attributes external
Product Attributes (External)
  • Cost: In-N-Out is relatively inexpensive. Comparable to any other burger joint.
  • Response time: Slow compared to the competition. You get your food more than twice as fast at McDonalds & Burger King.
  • Variety:Limited to burgers, fries, soda, and shakes.
  • Quality:In-N-Out is the gold standard for fast food.All the ingredients are fresh and everything is made to order. Nothing is pre-made.
process competencies internal
Process Competencies (Internal)
  • Cost: Kept low by owning distribution system and minimizing holding costs
  • Flow time: Made-to-order business model slows flow time compared to the competition. You get your food more than twice as fast at McDonalds & Burger King.
  • Flexibility:Cross-trained workers adds to flexibility, but highly dedicated capital resources limits it.
  • Quality:Consistent product. Accurate, reliable, and maintainable processes.
strategic positioning operational effectiveness
Strategic Positioning & Operational Effectiveness
  • Market driven business
    • Key competitive priorities
      • Low cost
      • Quick delivery-response time
      • Fresh
  • Competitive product space
    • Added quality
      • Made to order
    • Narrowed variety
  • Focused strategy and processes
    • Low flexibility
      • Dedicated capital resources
      • Maximize resource utilization

Responsiveness

Quality

strategic positioning operational effectiveness10
Strategic Positioning & Operational Effectiveness
  • The gluttonous customer dilemma
    • Accept or reject order?
      • Align processes with strategic position
      • Consider resource availability
process architecture

Process

Flexibility

High

JOB SHOP

(Commercial Printer,

Architecture firm)

Opportunity

BATCH

Costs

(Heavy Equipment,

Auto Repair)

FLOW SHOP

Connected Line

Flow (assembly line)

(Auto Assembly,

Car lubrication shop)

Out-of-pocket

CONTINUOUS

Costs

FLOW

Low

(Oil Refinery)

Product

Variety

Low

High

Few Major Products

Process Architecture
the process flowchart
The Process Flowchart

Flow unit = customer

Grill meat

Assemble

Burger

Drive

through

Assemble

Order

Place order

Order in

queue

Prepare

Fries

Walk-in

(Batches)

Clean/peel

potatoes

Slice

potatoes

Load fries

Cook fries

In oil

Unload

fries

Note: assemble order consists of making the burger with the grilled patty, boxing the fries, getting any drinks/cups (including shakes), box/tray order

process flow measures
Process Flow Measures

Ri, drive through(t)

  • Analyze Job Flow
    • Flow unit = 1 customer
      • Two inputs: Drive-through or walk-in
      • Any number of items per customer
        • Assume average order: Double-Double, Fries, drink
  • Stable process (Ri = Ro)
    • No unserved customers at closing time

Ro(t)

Ri, walk-in(t)

process flow measures14
Process Flow Measures

I

23

Problem:

When ΔR(t) > 0, line grows

ΔR= -11.0

ΔR=5.0

ΔR=1.0

ΔR=3.0

1:30pm

1:00pm

12:30pm

ΔR(t) = Ri(t) – Ro(t)

* Drive-through + walk-in

customer flow variability
Customer Flow Variability

  • Flow time (T) increases with:
    • Capacity utilization
    • Interarrival variability

I = R x T

flow rate and capacity analysis cont
Flow Rate and Capacity Analysis (cont)

* 16 total interchangeable workers

bottleneck analysis
Bottleneck Analysis
  • Levers for fixing the bottleneck
    • Take processes off critical path
      • Adjust strategic position
    • Increase capacity with more resources
      • To increase resources requires capital
      • Low utilization during low demand
  • Is the bottleneck a problem?
    • Ri = 114 orders x 85%* = 96.9 orders of fries per hour
    • Effective capacity = 261.0 orders per hour

*Based on observation

flow time as is
Flow Time – As is

Assemble

Burger

Assemble

Order

Load

Prep Fries

Cook Fries

Unload

Grill meat

Take

Order

Time (min)

flow time take fries off critical path
Flow Time – Take Fries off Critical Path

Assemble order

Assemble burger

Cook Fries (continuous)

Unload

Grill meat

Take

Order

Time (min)

flow time take fries grill off critical path
Flow Time – Take Fries & Grill off Critical Path

Assemble burger

Assemble order

Cook Fries

(continuous)

Unload

Grill meat

(delay)

Take

Order

Time (min)

levers for managing flow time
Levers for Managing Flow Time

  • Select
    • Takes McDonald’s fast food strategic position and focus it to only a few items
    • Eliminates customer initiated wait time (ie “gimme a minute…”)
      • Customers know what they want before getting into queue
      • “secret menu” off regular menu to avoid wasted time
        • Encourages knowing what you want before getting in queue
  • Eliminate
    • Drink cups with customers (walk-in)

levers for managing flow time24
Levers for Managing Flow Time
  • Drive through management
    • Avoid blockage (ie drive through line into street) & abandonment (customer gets frustrated and leaves)
    • Bring the window to the customer (PDA guys)
      • Possible without a mobile menu due to limited product variety
    • Single line layout
      • Describe effect on time in buffer
      • Saves real estate
      • Downside: deceivingly long line (customer does not realize it will move fast)
    • Dual line layout:
      • Choice of which queue to enter
      • Slower queue (ie someone with a long or complex order) holds up all customers behind him
      • Not possible to switch queues, so flow time is significantly slower for those who chose the slow line (cost: lost goodwill)
levers for managing flow time25
Levers for Managing Flow Time
  • Cultivate walk in business
  • Assign priorities (balance inflow sources)
    • Drive through
    • Walk in