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InNOut Burger

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As you may know, In-N-Out Burger is privately held and family operated. ... You get your food more than twice as fast at McDonalds & Burger King. ... – PowerPoint PPT presentation

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Title: InNOut Burger


1
In-N-Out Burger
  • Jeff Tolonen
  • Tom Sobelman

2
Why In-N-Out?
  • Everybody likes In-N-Out.
  • Part of Southern California Culture.
  • Its a thriving Mom Pop chain in today's
    corporate dominated Mc World.
  • In-N-Out is always crowded and for some reason
    people dont mind waiting.
  • They have a unique business model.

3
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

4
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

5
Side Note About In-NOut
  • What happened after I emailed In-N-Out
    Corporate?.NOTHING!!!
  • The response to my email
  • Dear Mr. Tom SobelmanThank 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

6
What it takes to get a call from In-N-Out Burger
Corp.
  • Customer Service _at_ In-N-Out,
  • Im finding your response, below, a little
    confusing. If the information that I was looking
    for was published- I wouldnt have contacted you,
    rather, I would have had it already. I would much
    rather prefer a yes we can or a no we cant.
    I am not competitor nor am I requesting specific
    information.  I find the fact that you wouldnt
    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- thats
    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 doesnt have time for students? 
  • Tom Sobelman
  • Operations Data Analyst
  • Care Level Management
  • Mobile (818) 665-9851
  • Office  (818) 595-8251
  • E-mail  tsobelman_at_carelevel.com

7
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.

8
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.

9
Strategic Positioning Operational Effectiveness
Responsiveness
  • 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

Quality
10
Strategic Positioning Operational Effectiveness
  • The gluttonous customer dilemma
  • Accept or reject order?
  • Align processes with strategic position
  • Consider resource availability

11
Process Architecture
12
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
13
Process Flow Measures
Ri, drive through(t)
Ro (t)
Ri, walk-in(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

14
Process Flow Measures
I
23
Problem When ?R(t) 0, line grows
?R -11.0
?R5.0
?R1.0
?R3.0
130pm
100pm
1230pm
?R(t) Ri(t) Ro(t)
Drive-through walk-in
15
Observed Flow Times
16
Customer Flow Variability
8
  • Flow time (T) increases with
  • Capacity utilization
  • Interarrival variability

I R x T
17
Flow Rate and Capacity Analysis
18
Flow Rate and Capacity Analysis (cont)
16 total interchangeable workers
19
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
20
Flow Time As is
Assemble Burger
Assemble Order
Load
Cook Fries
Prep Fries
Unload
Grill meat
Take Order
Time (min)
21
Flow Time Take Fries off Critical Path
Assemble order
Assemble burger
Cook Fries (continuous)
Unload
Grill meat
Take Order
Time (min)
22
Flow Time Take Fries Grill off Critical Path
Assemble burger
Assemble order
Cook Fries (continuous)
Unload
Grill meat (delay)
Take Order
Time (min)
23
Levers for Managing Flow Time
?
  • Select
  • Takes McDonalds 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)

?
24
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)

25
Levers for Managing Flow Time
  • Cultivate walk in business
  • Assign priorities (balance inflow sources)
  • Drive through
  • Walk in

26
Conclusion Discussion
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