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In-N-Out Moves South – Will Burger Joint Hit Florida Next?


Southern California’s In-N-Out Burger has officially opened in Texas. And if opening day of the Frisco location is any indication, McDonalds Corp. (NYSE: MCD), Wendy’s/Arby’s (NYSE: WEN) and other burger joints should be concerned about how it could affect business there.

Despite gas prices averaging more than $4 a gallon, folks waited as long as three hours in the In-N-Out drive-thru to get a taste of its burgers. Some even ran out of gas and had to have some delivered.

It’s all part of what some folks think is a big expansion plan that could bring the burger joint with a cult following to the entire Southern U.S.

In-N-Out has been creeping slowly eastward, much to the delight of anyone who has ever tasted its burgers. In addition to the Frisco and Allen locations in Texas, at least six others are planned for the Dallas-Fort Worth area. Future growth could bring In-N-Out restaurants to Houston, Austin and San Antonio.

More importantly, In-N-Out added a distribution center in Dallas to serve the Texas locations. And based on the nearly 700-mile radius of its distribution in the Western U.S. — its facility in Baldwin Park, Southern California, serves locations as far away as northern Utah — its feasible that In-N-Out could expand as far north as Iowa and as far east as the Florida panhandle.

In-N-Out, which previously operated in five Western states, has some of the most die-hard customers in all of America. Some even travel from state to state to help celebrate new openings, and according to quotes in sundry reports over the past day or two, all of them share a love for In-N-Out’s quality product and its lauded customer service.

While some fast-food joints are trying to trim the fat to appeal to health-conscious and status-seeking customers, In-N-Out takes pride in serving up its burgers — just burgers — hot and greasy. Best known is the Double Double, but all In-N-Out burgers are made with 100% fresh beef that’s never frozen. The french fries also are made with freshly cut potatoes.

As for customer service, ordering is as simple as bellowing a No. 1, 2 or 3 to the friendly waitstaff and then adding American cheese, leafed lettuce, sliced onions and/or In-N-Out’s special spread. The simple, good food and the straightforward, friendly ordering process make mistakes rare.

This appeal means there is big growth potential for the fast-food joint. However, folks in the East are likely have a long wait. It took In-N-Out almost three years to open eight restaurants in Utah. Despite a rabid following, the chain is measured in its expansion plans. It’s also worth noting that many burger joints are on the defensive. McDonald’s (MCD) recently raised prices on its Big Mac because of inflation, and Wendy’s (WEN) just hiked its menu prices for the second time in two months.

However, if In-N-Out is serious about growth, then McDonald’s and Wendy’s may have bigger problems on their hands than inflation. Increased competition from a chain with such loyal customers could really shake up the fast-food industry.

As of this writing, Cynthia Wilson did not own a position in any of the stocks named here.

Article printed from InvestorPlace Media,

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