Team 1 Term Project: In-N-Out Burger

In-N-Out Burger
Jeff Tolonen Tom Sobelman

Team 1 Term Project: In-N-Out Burger

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.

Team 1 Term Project: In-N-Out Burger

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

Team 1 Term Project: In-N-Out Burger

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

Team 1 Term Project: In-N-Out Burger

Side Note About In-NOut

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 Dreher Customer Service Representative

Team 1 Term Project: In-N-Out Burger

What it takes to get a call from In-N-Out Burger Corp.

Customer Service @ 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@carelevel.com

Team 1 Term Project: In-N-Out Burger

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.

Team 1 Term Project: In-N-Out Burger

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.

Team 1 Term Project: In-N-Out Burger

Strategic Positioning & Operational Effectiveness

Market driven business Key competitive priorities

Low cost Quick delivery-response time Fresh

Responsiveness

Competitive product space Added quality

Made to order

Narrowed variety Focused strategy and processes Low flexibility

Dedicated capital resources Maximize resource utilization

Quality

Team 1 Term Project: In-N-Out Burger

Strategic Positioning & Operational Effectiveness

The gluttonous customer dilemma Accept or reject order?

Align processes with strategic position Consider resource availability

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Team 1 Term Project: In-N-Out Burger

Process Architecture
Process Flexibility
High
JOB SHOP
(Commercial Printer, Architecture firm)

BATCH
(Heavy Equipment, Auto Repair)

FLOW SHOP
Connected Line Flow (assembly line) (Auto Assembly, Car lubrication shop)

CONTINUOUS FLOW

Low

(Oil Refinery)

Low
Few Major Products

High

Product Variety
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Team 1 Term Project: In-N-Out Burger

The Process Flowchart

Flow unit = customer

Drive through

Grill meat Place order

Assemble Burger Assemble Order

Order in queue

Walk-in Clean/peel potatoes Slice potatoes

Prepare Fries
(Batches)
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 12

Team 1 Term Project: In-N-Out Burger

Process Flow Measures

Ri, drive through(t)

Ri, walk-in(t)

Ro (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

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Team 1 Term Project: In-N-Out Burger

Process Flow Measures

I
23
R=5.0
Problem: When R(t) > 0, line grows

R= -11.0

R=1.0

R=3.0

12:30pm

1:00pm

1:30pm

R(t) = Ri(t) Ro(t)

Time Beginning Inv. * Inflow Rate Ri* Outflow Rate Ro* Buildup Rate R Ending Inventory*
*

12:30p NA NA NA NA 15+2=17

12:30-12:45p 15+2=17 24+10=34 19+10=29 5.0 19+3=22

12:45-1:00p 19+3=22 23+7=30 19+10=29 1.0 21+2=23

1:00-1:15p 21+2=23 12+6=18 19+10=29 -11.0 10+2=12

1:15-1:30p 10+2=12 16+16=32 19+10=29 3.0 14+1=15

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Drive-through + walk-in

Team 1 Term Project: In-N-Out Burger

Observed Flow Times

Random Order Walk-in Drive-through (12:30pm-1:30pm) (mm:ss) (mm:ss) 1 2 3 7:15 7:40 8:01 14:45 8:30 14:15

4
5 6 7

9:15
6:52 13:02 7:18

17:10
15:10 13:12 12:15

8
9 10 Average (T)

5:46
7:41 7:36 8:02

13:45
11:35 10:40 13:07
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Team 1 Term Project: In-N-Out Burger

Customer Flow Variability

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

I=RxT
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Team 1 Term Project: In-N-Out Burger

Flow Rate and Capacity Analysis

Resource pool Worker (cashier) Register Worker (flipper) Grill

Unit Load (min per order) 0.5 min 0.5 min 3.5 min 3.5 min

Worker (fry cook)

Fryer Worker (burger assembly) Counter workstation

0.5 min
5.5 min 0.25 min 0.25 min

Worker (order assembly)

Counter workstation

0.25 min
0.25 min
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Team 1 Term Project: In-N-Out Burger

Flow Rate and Capacity Analysis (cont)

Resource pool Unit Load (min per order) 0.5 min 0.5 min 3.5 min 3.5 min 0.5 min 5.5 min 0.25 min 0.25 min 0.25 min 0.25 min Units in pool (c) Min (16,3)=3 3 Min(16,2)=2 2 Min(16,8)=8 8 Min(16,5)=5 5 Min(16,5)=5 5 Load Batch (orders per batch) 1 1 20 20 3 3 1 1 1 1 Availability (min per hour) 60 60 60 60 60 60 60 60 60 60 Effective Capacity (orders per hour)
(3/0.5) x 1 x 60=360 (3/0.5) x 1 x 60=360 (2/3.5) x 20 x 60= 685 (2/3.5) x 20 x 60= 685 (8/0.5) x 3 x 60 = 2880 (8/5.5) x 3 x 60 = 261 (5/0.25) x 1 x 60 = 1200

Worker (cashier) * Register Worker (flipper) * Grill Worker (fry cook) * Fryer (baskets) Worker * (burger assembly) Counter workstations Worker * (order assembly) Counter workstations

(5/0.25) x 1 x 60 = 1200 (5/0.25) x 1 x 60 = 1200

(5/0.25) x 1 x 60 = 1200

16 total interchangeable workers

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Team 1 Term Project: In-N-Out Burger

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

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Team 1 Term Project: In-N-Out Burger

Flow Time As is

Load Prep Fries Grill meat

Take Order

Assemble Burger

Assemble Order

Cook Fries

Unload

-t

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0

Time (min)
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Team 1 Term Project: In-N-Out Burger

Flow Time Take Fries off Critical Path

Assemble burger Assemble order

Cook Fries (continuous) Grill meat

Take Order

Unload

-t

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0

Time (min)
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Team 1 Term Project: In-N-Out Burger

Flow Time Take Fries & Grill off Critical Path

Assemble burger

Assemble order

Cook Fries (continuous)

Unload

Grill meat (delay)

Take Order

-t

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0

Time (min)
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Team 1 Term Project: In-N-Out Burger

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)

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Team 1 Term Project: In-N-Out Burger

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)

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Team 1 Term Project: In-N-Out Burger

Levers for Managing Flow Time

Cultivate walk in business Assign priorities (balance inflow sources) Drive through Walk in

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Team 1 Term Project: In-N-Out Burger

Conclusion & Discussion

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