Last Updated Jun 16, 2011 11:40 AM EDT
In-N-Out. Founded in 1948 in Baldwin Park, California by Harry and Esther Snyder, In-N-Out targets young men 18 to 24 with an income less than $70,000, but has intensely loyal fans of all ages. It is positioned as a cut-above fast food with the slogan "quality you can taste." It also has a catchy jingle... "In-N-Out... In-N-Out... That's what a hamburger is all about." The logo uses red and yellow colors commonly used by larger competitors, such as McDonald's, Burger King, and Carl's Junior. Fast food marketers often employ red and yellow together because they know those colors make people hungry.
Five Guys. Founded in 1986 near Arlington, Virginia by 5 brothers in the Murrell family, Five Guys targets patrons 25 to 50 with an income over $100,000 with sit-down restaurants that are called fast casual - positioned between fast food and higher-end sit-down chains, such as the Cheesecake Factory. Unlike In-N-Out, Five guys restaurants are red and white. So are the uniforms.
In-N-Out. Offers a limited menu that focuses on freshly-made single and double burgers, fries and drinks. Those in the know, use a special-branded "In-N-Out lingo" such as "2-by-4" (double burger with four slices of cheese) "animal-style" (fries or burgers with melted cheese and grilled chopped onions mixed with a special thousand island dressing).
Five Guys. Similar to In-N-Out, Five Guys offers single and double burgers, but with special sauces and "hand-cut" fries. Burgers are larger than those of In-N-Out and most other burger chains. Five guys also offers a wider menu selection that includes Cajun fries, hot dogs and grilled cheese sandwiches. According to Tony Barnett, former employee of The Walt Disney Company and self-proclaimed burger aficionado now living on the East Coast, "I like Five Guys better."
In-N-Out. Distributes its product through 200 company-owned locations in California and 50 in other Western states. Most have sit-down areas inside and out as well as a drive-through window. As a rule, locations are kept very clean. The Company has followed a controlled growth strategy.
Five Guys. Distributes its product through 5 company-owned locations (one for each of the "guys") and 765 franchised locations in shopping malls in the US and Canada (27 are in California with with 200 more planned). Because there are no drive-through windows, dining rooms are larger than the inside spaces at In-N-Out. Franchising is growing the chain faster, but growth is still managed and controlled.
Because of the target audience, In-N-Out is less expensive than Five guys. In their penetration of Southern California, Five Guys plans to price its products higher than In-N-Out, but lower than smaller high-end chains such as The Counter, Elevation Burger, and R+D Kitchen.
Will they compete with each other?
Both companies target different segments with different price points and concentrations in different geographical areas. In markets with both chains, restaurant industry analysts believe they will compete for many of the same customers. Since most people like variety, customers will be happy to have two good choices. However, many believe the intensely loyal In-N-Out fans are less likely to stray.
What can marketers learn
From the examples of In-N-Out and Five guys, marketers can see a common pattern they use to compete with much larger chains. They both do the following:
- Know and understand their target audience
- Use strong branding elements
- Offer quality products (fresh and made to order)
- Treat employees and customers well
- Manage growth
- Attract a loyal following (intensely loyal for In-N-Out)
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Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). Follow him on Twitter.
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