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Team 1 Term Project: In-N-Out Burger
In-N-Out BurgerJeff Tolonen
Tom Sobelman
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Team 1 Term Project: In-N-Out Burger
Why In-N-Out?
Everybody likes In-N-Out.Part of Southern California Culture. It’s a thriving “Mom & Pop” chain in today's
corporate dominated “Mc World”. In-N-Out is always crowded and for some
reason people don’t mind waiting. They have a unique business model.
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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
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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
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Team 1 Term Project: In-N-Out Burger
Side Note About In-N–Out
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 DreherCustomer Service Representative
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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,
I’m finding your response, below, a little confusing. If the information that I was looking for was published- I wouldn’t have contacted you, rather, I would have had it already. I would much rather prefer a “yes we can” or a “no we can’t”. I am not competitor nor am I requesting specific information. I find the fact that you wouldn’t 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- that’s 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 doesn’t have time for students?
Tom SobelmanOperations Data AnalystCare Level ManagementMobile: (818) 665-9851Office: (818) 595-8251E-mail: [email protected]
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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.
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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.
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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
Competitive product space– Added quality
» Made to order– Narrowed variety
Focused strategy and processes– Low flexibility
» Dedicated capital resources» Maximize resource utilization
Quality
Responsiveness
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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
ProcessFlexibility
JOB SHOP
(Commercial Printer,Architecture firm)
BATCH
(Heavy Equipment,Auto Repair)
FLOW SHOP
(Auto Assembly,Car lubrication shop)
CONTINUOUSFLOW
(Oil Refinery)
ProductVariety
Low
Few Major Products
Connected LineFlow (assembly line)
Oppor
tunity
Costs
Out-of
-poc
ket
Costs
High
Low
High
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Team 1 Term Project: In-N-Out Burger
The Process Flowchart
Drive
through
Walk-in
Place order Order in
queue
Assemble
Order
Note: assemble order consists of making the burger with the grilled patty, boxing the fries, getting any drinks/cups (including shakes), box/tray order
Grill meat
Clean/peel
potatoes
Slice
potatoesLoad fries
Flow unit = customer
Assemble
Burger
Prepare
Fries
(Batches)
Cook fries
In oil
Unload
fries
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Team 1 Term Project: In-N-Out Burger
Process Flow Measures
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
Ro (t)
Ri, drive through(t)
Ri, walk-in(t)
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Team 1 Term Project: In-N-Out Burger
Process Flow Measures
12:30pm 1:30pm
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ΔR=5.0ΔR= -11.0
ΔR=1.0ΔR=3.0
Problem:
When ΔR(t) > 0, line grows
Time 12:30p 12:30-12:45p 12:45-1:00p 1:00-1:15p 1:15-1:30p
Beginning Inv. * NA 15+2=17 19+3=22 21+2=23 10+2=12
Inflow Rate Ri* NA 24+10=34 23+7=30 12+6=18 16+16=32
Outflow Rate Ro* NA 19+10=29 19+10=29 19+10=29 19+10=29
Buildup Rate ΔR NA 5.0 1.0 -11.0 3.0
Ending Inventory* 15+2=17 19+3=22 21+2=23 10+2=12 14+1=15
ΔR(t) = Ri(t) – Ro(t)
I
* Drive-through + walk-in
1:00pm
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Team 1 Term Project: In-N-Out Burger
Observed Flow Times
Random Order
(12:30pm-1:30pm)
Walk-in
(mm:ss)
Drive-through
(mm:ss)
1 7:15 14:45
2 7:40 8:30
3 8:01 14:15
4 9:15 17:10
5 6:52 15:10
6 13:02 13:12
7 7:18 12:15
8 5:46 13:45
9 7:41 11:35
10 7:36 10:40
Average (T) 8:02 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 = R x T
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Team 1 Term Project: In-N-Out Burger
Flow Rate and Capacity Analysis
Resource pool Unit Load (min per order)
Worker (cashier) 0.5 min
Register 0.5 min
Worker (flipper) 3.5 min
Grill 3.5 min
Worker (fry cook) 0.5 min
Fryer 5.5 min
Worker (burger assembly)
0.25 min
Counter workstation 0.25 min
Worker (order assembly)
0.25 min
Counter workstation 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)
Units in pool
(c)
Load Batch
(orders per batch)
Availability (min per
hour)
Effective Capacity (orders per hour)
Worker (cashier) * 0.5 min Min (16,3)=3 1 60 (3/0.5) x 1 x 60=360
Register 0.5 min 3 1 60 (3/0.5) x 1 x 60=360
Worker (flipper) * 3.5 min Min(16,2)=2 20 60 (2/3.5) x 20 x 60= 685
Grill 3.5 min 2 20 60 (2/3.5) x 20 x 60= 685
Worker (fry cook) * 0.5 min Min(16,8)=8 3 60 (8/0.5) x 3 x 60 = 2880
Fryer (baskets) 5.5 min 8 3 60 (8/5.5) x 3 x 60 = 261
Worker *
(burger assembly)
0.25 min Min(16,5)=5 1 60 (5/0.25) x 1 x 60 = 1200
Counter workstations 0.25 min 5 1 60 (5/0.25) x 1 x 60 = 1200
Worker *
(order assembly)
0.25 min Min(16,5)=5 1 60 (5/0.25) x 1 x 60 = 1200
Counter workstations 0.25 min 5 1 60 (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
Take
Order
Grill meat
Time (min)
-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
Cook Fries
Assemble
BurgerAssemble
Order
Prep Fries
Load
Unload
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Team 1 Term Project: In-N-Out Burger
Flow Time – Take Fries off Critical Path
Take
Order
Grill meat
Time (min)
-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
Cook Fries (continuous) Unload
Assemble order
Assemble burger
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Team 1 Term Project: In-N-Out Burger
Flow Time – Take Fries & Grill off Critical Path
Take
Order
Grill meat
(delay)
Time (min)
-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
Cook Fries
(continuous) Unload
Assemble order
Assemble burger
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Team 1 Term Project: In-N-Out Burger
Levers for Managing Flow Time
Select
– Takes McDonald’s 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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