Why This $1.8B Business Dominates

Hey founders!

Tribe has been live for two weeks now! Wow!

We love seeing the activity in our Slack community: encouragement, advice, connections, and more. Tribe is becoming exactly what we envisioned – a space for founders to collaborate and connect.

What's been your favorite discussion so far? Learned anything valuable in these first two weeks? Drop us a line – we’d love to hear!

Now, let’s dive into today’s case study.

The $1.8B Food Empire Doing Everything Right

If you’re from the West Coast, you probably have a die-hard affinity for IN-N-Out. 

Now before you start lamenting about their fries (yes, their fries could be better), let’s talk about the In-N-Out experience.

• Menu: limited and specialized

• Prices: lower than competitors

• Lines: always long

• Culture: excellence and hospitality

And that’s just the customer side of things! 

Inside the company, it’s just as impressive

• Career Pathing: Much better

• Marketing Spend: Lower

• Employee Training: More in-depth

• Hiring Standards: High

So what’s going on here? What can we learn from the In-N-Out experience? 

Lesson #1: Do ONE Thing Extremely Well 

Let’s take a look at two menus. 

What do you immediately notice?

Look at In-N-Out’s menu. They do one thing better than anyone: burgers.

Why? Because they focus solely on burgers. No wraps, salads, or sandwiches.

Contrast this with Burger King: burgers, chicken, cookies, shakes, and mozzarella sticks. 

Don’t get me wrong, Burger King does just fine at $2.3B per year. 

At face value, Burger King is worth more than In-N-Out. So it must be a better business, right? 

Well… this leads us to our next lesson.

Lesson #2: Volume vs. Value

$2.3B > $1.8B 

Numbers are numbers. 

Burger King does 1.5X MORE in revenue every year than In-N-Out.

Impressive, right? Well… let’s zoom in just a bit more.

Burger King: $2.3B revenue from 19,789 stores. 

In-N-Out: $1.8B revenue from 400 stores.

Napkin math on value per store:

$2.3B / 19,789 = $141,518 per store

$1.8B / 400 = $4,500,000 per store

On a per-store basis, In-N-Out is 31X more valuable than Burger King

Wow… 

The way we see it, you have two options for a business: 

• Option A: Volume.

• Option B: Value.

Volume: go for the masses. Gobble up as many customers as you can. Solve every problem.  

Value: go for quality. Aim for a specific subset of customers. Solve a specific problem. 

This brings us to the final lesson…

Lesson #3: Many Paths

It’s easy to look at this short breakdown and think:

Logical conclusion. 

But it’s important to think about the type of business you want to run. 

Maybe your business model is best suited to be like In-N-Out:

You can deliver a better singular product or service than anyone else. You can niche-down until you find your exact target customer. 

Or maybe your business model is better suited to be like Burger King:

Your product or service can serve anyone. Your capacity and potential is wide. Bring as many people into the fold as possible, that’s how you’ll make your money.

The truth is that there are many paths to success. 

It would be insincere to applaud In-N-Out and crap on Burger King. We didn’t even dive into other elements of their business (such as profit), but just looking at their face-value numbers, they’re both doing great.

So it begs the question…

What Type of Business Do You Want to Run? 

Within the Tribe community, we have all sorts of business models: SaaS, niche services, physical products, communities, and more. 

There are a million ways to do it. 

But here are a few questions to reflect on as we head into the weekend:

1. What unique value sets your business apart?

2. How can you refine your product/service to meet your target customer's needs?

3. Are you aiming for high volume or high value? Why?

That's it for this week. Have a great weekend! 

– The Tribe Team