In-N-Out Burger opened its first location in Baldwin Park, California, in 1948. Harry and Esther Snyder built a drive-through hamburger stand so small that customers could watch their food being made. The menu had three items: a hamburger, a cheeseburger, and a drink. French fries were added later. Milkshakes came after that.

That was 77 years ago. Today, In-N-Out operates roughly 400 stores across seven US states. The menu is essentially unchanged. Hamburger. Cheeseburger. Double-Double. Fries. Shakes. Drinks. No chicken. No fish. No salads. No breakfast items. No delivery app. No franchises. No public stock offering.

For comparison, McDonald's operates over 40,000 restaurants in more than 100 countries. Five Guys has more than 1,700 locations. Shake Shack has over 500. In-N-Out, in 77 years, has opened 400.

Every week in this series, I study one entity — a musician, a company, a family, an institution — that has built something genuinely durable. I pull apart how they did it. I extract the principles. And then I apply them — because every rule that kept a hamburger chain at 400 stores while generating estimated annual revenue of over $4 billion applies equally to your newsletter, your product, and your business.

I'm calling it The In-N-Out Code. Five principles. Counter-intuitive. Brutally effective.

Every fast-food empire in modern history was built on franchising. McDonald's, Burger King, Subway, KFC, Wendy's — the model is identical. Sell the rights to operate under your brand. Collect franchise fees and royalty percentages. Scale without capital expenditure. The franchise model is the reason McDonald's has 40,000 locations. It is the fastest path to scale in food service.

In-N-Out has never franchised. Every store is company-owned. Every employee is a company employee. Every hamburger is made to the same specification in a kitchen controlled by the company.

The trade-off is obvious: slower growth. In-N-Out cannot expand as quickly because every new store requires corporate capital, corporate hiring, and corporate oversight. But the benefit is total control. The quality of the product does not vary by franchisee. The customer experience does not depend on the local operator's commitment. The brand is not at the mercy of an independent business owner who may cut corners to improve their personal margin.

Lynsi Snyder, the granddaughter of the founders and current owner, has said: "I don't think we will ever franchise. It would compromise the quality." That is not a temporary position. It is a structural decision that defines every other aspect of the business.

The lesson: control and scale are in tension. You can have one or the other, and the choice defines your business. If quality is your competitive advantage, surrendering control to scale faster may destroy the thing that made you valuable.

In-N-Out's menu fits on a card the size of a business card. Four food items. Three drinks. That is it. The "secret menu" — Animal Style, Protein Style, 4x4 — is real, but it uses the same ingredients in different combinations. The total ingredient count is remarkably small: beef, lettuce, tomato, onion, spread, cheese, buns, potatoes, and a handful of other items.

This simplicity drives operational excellence. The kitchen is not a complex production line managing dozens of ingredients across dozens of menu items. It is a focused operation with minimal variability. The result is speed, consistency, and waste reduction.

It also drives supply chain focus. In-N-Out processes its own beef. The company operates its own patty-making facilities. It delivers fresh ingredients — never frozen — from its own distribution centers. Because the menu is limited, the supply chain is manageable. Because the supply chain is manageable, quality control is precise.

Every item McDonald's adds to its menu increases kitchen complexity, training requirements, ingredient sourcing, and the probability of error. Every item In-N-Out does not add eliminates all four.

The lesson: simplicity is not a limitation. It is an operational advantage. A smaller menu — or a smaller product line — allows deeper quality, faster execution, and lower waste. Do fewer things. Do them better.

In-N-Out's starting wage for new associates is among the highest in the fast-food industry. Store managers earn well into six figures — reports consistently cite average manager compensation above $160,000. Part-time workers receive benefits. The company provides a 401(k) plan.

In an industry defined by minimum wage, high turnover, and low morale, In-N-Out operates as a genuine employer of choice. The result is a turnover rate far below the fast-food average. Employees stay longer, learn the operation more thoroughly, and deliver a consistently higher level of service.

Walk into any In-N-Out and you will notice something unusual: the staff seem to want to be there. They move quickly. They communicate. They smile — and it does not appear rehearsed. The energy is visible. And it is visible because it is real.

Harry Snyder established the principle early: if you pay people well and treat them well, they will stay and they will care. The economics bear it out — the cost of constantly recruiting, hiring, and training new employees at industry-standard wages far exceeds the cost of paying above market and keeping the people who already know the job.

The lesson: the cheapest workforce is the one that stays. Pay what it takes to retain good people, and the operational savings will exceed the wage premium every time.

In-N-Out has never used frozen beef. Has never used heat lamps. Has never used microwaves. Has never used freezers in its restaurants. The fries are cut from whole potatoes in the store, every day. The lettuce is hand-leafed. The burger patties are made from fresh beef at company facilities and delivered chilled — never frozen — to stores.

This commitment to freshness is the primary constraint on growth. In-N-Out can only expand to locations within a day's drive of a company distribution center. That is why, after 77 years, the chain has not expanded to the East Coast. The logistics of delivering fresh, never-frozen ingredients across thousands of miles would compromise the supply chain — and compromising the supply chain would compromise the product.

Other chains could make the same claim if they were willing to accept the same constraint. They are not. The economics of frozen product — longer shelf life, wider distribution radius, lower waste — are powerful. In-N-Out has rejected those economics in favor of a product standard that the customer can taste.

This is not romance. It is positioning. The fresh-never-frozen promise gives In-N-Out a credibility advantage that no advertising campaign can replicate. The customer believes in the product because the constraint is visible and the sacrifice is real.

The lesson: constraints that protect quality are not problems to be solved. They are barriers that competitors cannot cross. Embrace the constraint. Let it limit your growth. Let your growth be slower and your product be better.

In-N-Out is a family-owned business. Lynsi Snyder holds 100 percent of the company. There are no outside investors. No private equity partners. No board of directors answerable to shareholders. No quarterly earnings calls. No pressure to grow at a rate that satisfies Wall Street analysts.

This structure is the precondition for every other rule. The decision not to franchise is only possible because there is no investor demanding faster scale. The decision to pay above market is only possible because there is no analyst questioning the labor cost line. The decision to stay regional rather than go national is only possible because there is no board pushing for expansion.

Public companies are structurally incentivized to grow, even when growth compromises quality. Private companies can choose to stay small — or at least to grow slowly, on their own terms. In-N-Out has made that choice for 77 years.

The result is a brand that is simultaneously small in footprint and enormous in cultural impact. People fly to California for In-N-Out. They wear the T-shirts. They wait in 45-minute drive-through lines. The scarcity — 400 stores versus McDonald's 40,000 — is part of the appeal. And the appeal is only possible because the ownership structure allows it.

The lesson: the ownership structure determines the strategy. If you want to build a business that prioritizes quality over growth, you need an ownership structure that does not punish restraint.

Control creates quality. Franchising scales fast but surrenders control. If quality is the product, keep control of the kitchen.

Simplify ruthlessly. A narrow menu — or a narrow product line — enables operational excellence. Complexity is the enemy of consistency.

Invest in people. The cost of high wages is less than the cost of constant turnover. Pay well. Retain well. Perform well.

Let quality constrain growth. If your standard requires fresh-never-frozen, then your expansion radius is limited by distribution. Accept it. The constraint is the credibility.

Own the decision. The ownership structure determines what choices are available. Private ownership enables patience. Public ownership demands growth. Choose the structure that fits the business you actually want to build.

A drive-through stand in Baldwin Park. Four food items. No franchises. 400 stores in 77 years. Fresh beef, hand-leafed lettuce, fries cut from whole potatoes. Estimated revenue above $4 billion. A 45-minute drive-through line in every city where it operates.

That is not a hamburger chain. That is a code.

Next edition of The Alun Hill Business Code: Edition #16 examines Trader Joe's — the grocery chain that spends nothing on advertising and has no online store.