Can You Open an In-n-Out Franchise in 2023?
In n Out Burger is a popular name in the fast-food burger industry known for its crossed palm trees, fresh ingredients, and their very simple menu of four items. With 370 locations across California and the Southwest, the regional brand is consistently rated as one of the top fast-food chains in several customer surveys.
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Is In n Out Franchised?
In n Out has a long history of being a family-owned business; its current CEO, Lynsi Snyder, is the only grandchild of founders Harry and Esther Synder, who founded the company in 1948 in Baldwin Park, California. The brand has consistently chosen to remain privately held and not to franchise its operations in the name of prioritizing quality and consistency over rapid growth.
Prospective franchisees who intend to explore franchising opportunities in the fast foods market should assess comparable businesses in the industry, such as In n Out Burger. In n Out does not disclose any financial information. We will estimate their revenues and expected franchise cost – if it were to be franchised – from comparable competitors in the fast-food industry. Most In n Out restaurants follow the same classic, 3800 square feet store layout.
According to the Real Estate Development Department of In-n-Out, site selection is a carefully planned out process. All sites must meet minimum standards that include a surrounding population of at least 60,000 people, a lot size of 45,000+ square feet, a drive through that can stack at least 12 cars, and at least 75 indoor seats and 20 outdoor seats.
| Minimum Standards for All Site | |
|---|---|
| Traffic | 50,000+ ADT at Site |
| Population | 60,000+ (Trade Area) |
| Median Income | $45,000+ (Trade Area) |
| Lot Size | 45,000+ sq. ft. |
| Building Area | Approximately 3,800 sq. ft. |
| Seating Capacity | 75 Seats Inside, 20 Seats Outside |
| Minimum Parking Required | 45 Spaces |
| Minimum Drive-Thru Stacking | 12+ Cars |
| Preferred Sites | Dynamic, high activity areas near retail mass, freeway location, major intersections, and commercial shopping center pads. |
| Signane | Prominent pylon sign on major arterial |
| Zoning | Commercial with usage for fast food drive-thru, permitting hours of operation from 10:30am to 1:30am, 7 days a week. |
| Attributes | High visibility, easy ingress/egress, ability to use our “classic” image. |
| Deal Structure | 1. Purchase 2. Lease (With option to purchase) |
SmashBurger as a Comparable Company
Based on these requirements, a comparable company to look at would be Smashburger. Which is another regional burger chain in Denver. The estimated cost to open a Smashburger franchise is in the range of $604,260 to $1,962,100. Most of the cost comes from leasehold improvements.
Of which a significant portion of it comes from leasehold improvements. However, the average Smashburger store is between 1,600 and 2,200 square feet and seats 40 to 70 customers. Meaning that In-n-Out stores are significantly larger and drive in more traffic than a Smashburger.
Which means that In n Out stores are significantly larger and drive in more traffic than a Smashburger. Thus, we can estimate that an In n Out franchise would cost significantly more than a Smashburger.
Franchise Agreement
| Type of Expenditure | Amount | Method Of Payment | When Due | To Whom Payment Is To Be Made |
|---|---|---|---|---|
| Initial Fees | $40,000 | Lump Sum | On Execution | Us |
| Leasehold Improvements | $388,100 – $1,220,800 | As Arranged | As Invoiced | Landlord/Suppliers |
| Furniture, Fixtures and Equipment | $43,400 – $176,900 | As Arranged | As Invoiced | Suppliers |
| Signane | $5,500 – $34,700 | As Arranged | As Invoiced | Suppliers |
| IT, POS System | $21,900 – $49,500 | As Arranged | As Invoiced | Suppliers |
| Three Month’s Rent | $15,500 – $75,600 | As Arranged | As Invoiced | Landlord |
| Security Deposit, Business Licenses | $1,560 – $50,000 | As Arranged | As Incurred | Landlord/Suppliers, Professional SVC. Firms |
| Opening Inventory and Supplies | $15,000 – $20,000 | As Arranged | As Invoiced | Suppliers |
| Grand Opening Advertising | $10,000 | As Arranged | As Invoiced | Suppliers |
| Training Expenses | $34,000 – $181,700 | As Arranged | As Invoiced | Suppliers and Employees |
| Grand Opening Assistance | $0 – $30,000 | As Arranged | As Invoiced | Us |
| Miscellaneous Opening Costs | $500 – $5,000 | As Arranged | As Invoiced | Suppliers, State Agencies and Employees |
| Professional Fees | $5,000 – $15,000 | As Arranged | As Invoiced | Supplier Professionals |
| Insurance Premiums – 3 Months | $10,000 – $20,000 | As Arranged | As Invoiced | Insurance Carrier |
| Liquor Licensing | $1,600 – $11,400 | As Arranged | As Invoiced or On Filing For License | Suppliers and Government Agency |
| Lease Review Fee | $1,500 | Lump Sum | Submission of Lease | Us or Our Affilites |
| Additional Funds – 3 Months | $10,000 – $20,000 | As Arranged | As Incurred | Suppliers and Employees |
| Total Estimated Initial Investment | $604,260 – $1,962,100 |
Conclusion
In conclusion, you cannot currently open an In-n-Out franchise, and In-n-Out ownership does not plan on franchising anytime soon. The company remains privately held and does not disclose financial information. This makes it difficult to estimate the costs associated with opening a franchise. Moreover, it complicates calculation of revenues and costs associated with the daily operations of an individual store. Nevertheless, the company remains one of the highest-rated burger brands in the nation and has recently expanded its operations. This indicates that In-n-Out is a stable, growing company.
