In& Out
Baskersfield, CA
In-N-Out Burger is an American regional chain of fast food restaurants with locations primarily in the American Southwest and Pacific coast. It was founded in Baldwin Park, California in 1948 by Harry Snyder and Esther Snyder. The chain is currently headquartered in Irvine, California and has slowly expanded outside Southern California into the rest of California, as well as into Arizona, Nevada, Utah, Texas, and Oregon. The current owner is Lynsi Snyder, the Snyders’ only grandchild. As the chain has expanded, it has opened several distribution centers in addition to its original Baldwin Park location.
The new facilities, located in Lathrop, California; Phoenix, Arizona; Draper, Utah; and Dallas, Texas will provide for potential future expansion into other parts of the country. In-N-Out Burger has resisted franchising its operations or going public; one reason is the prospect of quality or customer consistency being compromised by excessively rapid business growth. The company’s business practices have been noted for employee-centered personnel policies. For example, In-N-Out is one of the few fast food chains in the United States to pay its employees more than state and federally mandated minimum wage guidelines – starting at US 11.00 per hour in California, as of May 2017. The In-N-Out restaurant chain has developed a highly loyal customer base, and has been rated as one of the top fast food restaurants in several customer satisfaction surveys.
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Typical Lease Characteristics
Lease Term: 20-40 Years Years
Lease Type: Ground Lease
Lease Increases: 10% Every 5 years
Lease Extensions: 4-5 (5) Year Options
Lease Guarantor: Corporate
Tenant Overview
In & Out make for great investment opportunities, however an important consideration when looking at ground leases, (which all In&Out locations are) is that the investor cannot depreciate the asset. Therefore a good strategy is when comparing this investment to other NNN investments, is to compare final cash flows, not simply NOI.
Positives:
- Loyal Customer Following
- Unique and simplified business model
- Typically Long term leases with increases
Negatives:
- Ground Leases, with no asset deprecation
- Competitive Industry Sector
- Susceptible to economic trends and pressures
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In& Out Company Profile
Headquarters Information
Irvine, California
Founded in 1948
Company type: Private
Sector: Services
Industry: Fast food restaurant
# of Employees: 16,000