“Everything is bigger in Texas. That’s why I call my underwear ‘Texas’.”
Undoubtedly boastful. Also undoubtedly a maxim that’s not everyone’s cup of tea. Nor should you allow this thinking in your business. Bigger is not always better.
As Greig wrote on Tuesday, scaling up shouldn’t be driven by simply wanting more. Every business, whether big, micro, or anything in between, reaches a point where bigger becomes crippling. For most small businesses, hitting this economies-of-scale point happens early.
The only time bigger might be better is when competing on price. For your small business, this should not be your competitive point of difference. It’s simply not in the small enterprise’s armoury to dictate terms with suppliers or be a household name with an outlet on every corner. Rather, your strengths must focus on quality, convenience, a tailored product, or personal relationships.
A thought-provoking case study of this is In-N-Out Burgers, which smashes the stereotype of fast food brands having none of these strengths.
Unless you live in the south-west parts of USA, you probably haven’t heard of In-N-Out. A family business that started in 1948, it grew to only 334 locations by 2018. (History, In-N-Out Burgers.) With McDonald’s’ 38,000+ global outlets, KFC’s 24,000, and Burger King’s 18,000+, In-N-Out clearly is not competing on ubiquity against the global “leaders” in fast food. (Statista, Wikipedia, Statista)
So what is it exactly that has In-N-Out’s patrons reportedly drive 4 hours or even take flights to wait in queues to get their fix? In short, In-N-Out trades on exceptional quality,
This shows up in a number of ways:
- Consistency in everything, from the menu to the product itself, service, shop layout, decor, and drive-through.
- Very fast (and friendly) service.
- Ultra-simple menu, being only 3 types of burger, 1 size of fries, and 12 types of drinks (PolyMatter), with very few changes over time or across outlets.
- Fresh ingredients prepared daily and delivered for consumption within 24 hours.
- Exacting standards had them close all outlets in Texas for 2 days in 2018 until an issue with defective buns could be resolved.
- Extensive training for staff, e.g. the cook is not just any burger flipper, but gets 3-6 months’ training and is the second-most senior person in the shop.
- Very low staff turnover, with an average churn of 14 years.
- Excellent employee care, remuneration and benefits, e.g. store supervisors earn an average of $160,000.
Despite this extensive focus on quality – their burgers actually look like “proper” burgers and not “factory food” – In-N-Out’s prices are also competitive. The distinction, though, is that price is not the point of difference but a by-product of high system maturity (policies, processes and quality management) and well-trained staff.
For In-N-Out, growing bigger would stress their strengths. The only way to sustain this would be to reduce quality, which would break the magic of the business.
As absurdly boastful as naming everything dear to you "Texas", bigger is not better. Better is better.
Which of the many lessons can you apply from In-N-Out to your businesses?