Thanks Gonzalo! I highly recommend trying In-N-Out next time you are near one – it is definitely worth a try! I think their main challenges in the future will be maintaining their quality and fresh ingredients as they continue to expand their footprint. I am hoping that eventually they will make it all the way to the east coast, but there are certainly challenges in expanding this far away from their headquarters (and far from where most of their supply comes from).
Thanks Vincent! Shake Shack and In-N-Out definitely have similar values (friendly service, high quality food). But In-N-Out definitely seeks to be more accessible – both price-wise and convenience wise – whereas Shake Shack is more upscale. While Shake Shack is primarily in urban or wealthy suburban locales, In-N-Out is in diverse locations, often close to highway exits with a drive-through. In-N-Out is substantially less expensive than Shake Shake (<$2 for a burger, vs. Shake Shack's $6+). Shake Shack also offers beer and wine (with upscale offerings) and a slightly more diverse menu than In-N-Out. Overall, though, they are quite similar!
Thanks Chun! I definitely think that their locations are part of their marketing strategy – all close to highway exits (with very large, visible signs) or in high-traffic areas (i.e. right next to UCLA in Westwood). In-N-Out does do a tiny bit of marketing, but it is almost all radio ads, which is odd but also fits their their nostalgic vibe (and focus on cars/travel/convenience). But I think you’re spot on, it’s primarily word of mouth – and I think things like the “secret” menu help with this, because people feel like they are “in” on something special when they hear/know about it, reinforcing the cult image of In-N-Out.
Thanks Snigdha! I definitely agree that In-N-Out has placed limitations on themselves with their slow geographic expansion and small (tiny really) menu. Sadly for the non-beef eaters, I doubt that In-N-Out will be moving to make any significant menu changes any time soon; they pride themselves on maintaining their original menu, and use it as a marketing tactic. (The good news is, there is a vegetarian grilled cheese on the “secret” menu! I highly recommend it!) In terms of health consciousness, In-N-Out was actually one of the first fast food restaurants to offer lettuce-wrapped burgers (as far back as the 60s!), but I don’t think they’ll be adding salads (or similar options) to their menu. I think the marketing value of sticking to their original menu – and their strengths – is too high at this point in time.
Regarding distribution, it does seem to be based on population density (though the expansion to Utah as opposed to, say, Seattle puzzles me). That said, I think proximity to fresh California-grown produce is a huge factor – by the time all of the tomatoes and lettuce would make it Boston or New York, they wouldn’t be quite as fresh or delicious. I think that was a major factor to open a new distribution center in Texas (as opposed to the Northeast). But I am hopeful that someday New York will get an In-N-Out! A girl can dream!
Thanks Yendi! I agree, it is very nice to see alignment of internal and external stakeholders – In-N-Out makes everyone happy!
Thanks Michael! I agree, the lack of In-N-Out in Boston is tragic. I definitely agree that their lack of scalability provides opportunity for competitors to gain market share. However, I think it also works as a marketing tactic, solidifying the “cult status” of the brand, such that when they do enter new markets, they should be able to quickly gain market share (as has happened in more recent markets – Texas and Oregon). This is likely due to their high brand awareness, but also competitive pricing (much less than competitors like Five Guys or Shake Shack) and convenience (drive through!).
Very interesting, Gonzalo! I would be very curious to see how Gamestop sells digital copies of games in store. Do customers buy an access code that they then use on their console at home? I also wonder if this business model could ever translate to other content that straddles digital and physical (film, television, music) – could a more social environment encourage in-store sales, or is non-gaming content viewed as too much of a commodity to attract customers to a physical space? Very interesting to see how the physical-to-digital transition plays out across all of these industries!
Very interesting post! One question I have is how Greenhill decides how to hire people for their lean middle management positions. Is it based on intelligence and capacity for work (as they would hire an analyst), or more on potential for bringing in clients later in more senior positions? Or does the firm assume that intelligence and willingness to work hard will reap rewards in the form of bringing in business down the line? Would be interesting to know what the firm values for these positions.
Very interesting post! One question I have is, given their limited capacity, are they constantly at 100% utilization in their Trenton facility (aside from during the recession)? If so, what would the costs/benefits be of potentially expanding their facility to allow for more boats to be produced or serviced at any given time? Also, given the enormous percentage of their revenue that comes from servicing boats – what drives Hinckley customers to use the manufacturer to service? Do new boat buyers sign service contracts, or do they simply return to Hinckley for service because of brand equity and their desire to keep their boats as “purely Hinckley” as possible? Either way, an extremely interesting company!!
Thanks Jacob! I believe the 500-mile radius was determined by a day’s drive, and I too am curious why they decided to break the rule for their Utah locations. Unfortunately Boston is still about 1,800 miles from their nearest distribution center in Dallas so it looks like we won’t be able to try any of those specially-stocked Secret Menu ingredients any time soon…
Very interesting post!! While I was familiar with Netflix’s hiring process (their “high risk, high reward” salaries are legendary in LA, and have convinced many studio employees to defect), I never considered how well it aligned with their operating model. One question I have is, how would user-generated content be integrated into their current business model? Would it look more like YouTube, where anyone can post (almost) anything, or Amazon Studios / Amazon Prime Video, which crowd-sources scripts and pitches but produces the content in-house? If in-house, how would the studios respond – would Netflix still rely on them for traditional film and broadcast/cable TV content, or eliminate them from their business model entirely? And in any of these cases, what would customers think? Given Netflix’s past failed attempts at change (the Qwikster disaster), how will management implement change over time without alienating customers? All fascinating questions – I can’t wait to see how the company evolves in the next few years!!
Amazing post! Disney definitely has legendary integration of all of their properties (in my last job we called it “franchise management”). One question I have is how they integrate their parks operations into their film operations – e.g. when deciding whether to greenlight a film like Frozen, do the franchise management or parks executives have involvement in the approval process? It’s a bit of a chicken/egg question – is quality film/TV content Disney’s top priority, or exploiting that content in consumer products/theme parks/etc.? Who within the corporation has more say over the creative process (and is it truly a creative process, or more of a commercial one)? Whatever Disney is doing, it is certainly working!!
Bridget – Amazing post! So interesting to read about the business and operating models behind my favorite workout class. Some questions I have: are there economies of scale when SoulCycle opens new locations in a city – i.e. can instructors or other staff work across multiple locations (potentially saving on benefits payments, etc.)? Or is it more efficient for Soul to open new locations in new cities, to expand their client base? I would also be extremely interested to see their total capacity utilization across locations, and how the utilization scales over time after a new location opens. (I would imagine that certain Manhattan locations operate at almost 100% capacity, while the Boston locations are far lower – but it also probably varies highly based on class times.) Overall, very interesting!!