Hello Innovator!

Surely you’ve heard of the cult following that California’s In-N-Out burger chain has amassed. Whether you want your burger 3×3 and animal style or you’re more of a grilled cheese type, one thing you can count on is that your In-N-Out order will be made with more dedication and attention to detail that any Big Mac you’ll ever taste (or live to regret).

This week, we’re exploring how In-N-Out is leading innovation in the fast food industry by making a decision that no McDonald’s franchisee would dream of.

Read on to find out what it is.

Here’s what you’ll find:

• This Week’s Article: What is In-N-Out's Greatest Innovation?

• Case Study: The Trader Joe’s Retention Advantage

• Share This: How do In-N-Out’s Employee Retention Efforts Impact Costs?

What is In-N-Out's Greatest Innovation?

It’s not the secret menu…

Fast food giants typically squeeze margins by minimizing wages.
But In-N-Out took a different route.
They doubled down on people. Literally.

Entry-level workers at In-N-Out make nearly 2x minimum wage. And store managers are on track for a healthy 6-figure salary (managers earn $160,000 to $200,000 per year with bonuses). Every manager starts at the bottom and gets promoted internally. No outside hires. Which ensures that they know the business from the ground up.

The result?

While most fast food restaurants churn through 150 percent of their workforce every year, In-N-Out’s turnover hovers around 20 percent.

That stability drives consistency, better service, and larger orders. And it shows up in the numbers. A typical McDonald’s location generates $2 to $3 million per year. An In-N-Out location? Around $6 million.

How the Rest of the Industry Gets It Wrong

In the broader fast food sector, the norm is churn-and-burn.

Workers are paid as little as legally possible. Training is minimal. Advancement paths are vague or nonexistent. HR is run like a compliance department, not a talent function. Employee development is outsourced or skipped entirely. And success is measured in labor cost percentages, not retention rates.

The result? High turnover. Inconsistent service. Brand experiences that vary wildly store to store. And costs that keep creeping up, right alongside turnover.

The System Behind the Loyalty

In-N-Out’s model wasn’t built on higher pay alone. It was built to support people who stay and thrive inside the system.

In-N-Out created In-N-Out University in 1984 to formalize career development. The University isn’t just for onboarding new staff. It delivers structured, repeatable training at every level, from associate to store manager. Each program reinforces operational excellence, decision-making, and culture, ensuring that employees not only know what to do, but why it matters.

As a result, the average store manager has been with the company for 14 years. Even part-time associates typically stay longer than industry averages.

The fast food industry assumes churn is unavoidable.
In-N-Out built an operating model that proves otherwise. 

The Real ROI of Investing in People

Companies with high employee engagement see 21% higher profitability and 59% less turnover, according to Gallup’s 2020 research. Corporate HR benchmarks show it takes 42 days and $4,700 to fill a role on average (SHRM, 2022).

And that’s before factoring in productivity ramp-up and team friction.

Replacing a single, frontline, hourly worker can cost an estimated $3,000 to $5,000. Higher-value talent costs more. When companies accept churn as normal, they lock in a cycle of waste.

In-N-Out avoided that trap. They spent upfront on better pay, benefits, and a clear career path. Employees receive health insurance, paid vacation, and 401(k) options. Even if they’re hourly.

What most see as labor “expenses,” In-N-Out treats as strategic investment.

Innovation at Its Worst Best

Treating people like people shouldn’t qualify as innovation.
But, unfortunately, in today’s world it does.

Because when the majority of an industry builds systems designed to burn through people as fast as possible, creating one that respects, develops, and retains people becomes the radical path.

Instead of building for automation, AI-powered ordering, and burger-flipping robots, In-N-Out did something more difficult: they committed to a people-first system. A system that encourages employees stay, grow, deliver, and earn more value over time.

This is innovation with teeth. And it works. (In spite of the fact that it’s a shame we have to call this innovation.)

How In-N-Out’s Labor Strategy Fuels Innovation Capacity

One of the biggest challenges in innovation, particularly for corporate teams, is longevity. People aren’t incentivized to stick around long enough to carry an idea from note pad to market. Teams spin up, run a pilot, and iterate a bit. But along the way, people leave, the lessons vanish, and the next team loses the context of the original effort and starts from scratch.

In-N-Out’s model offers a counterexample. They don’t simply retain workers. They retain competency, standards, and trust, all the things that can’t be rebuilt every six months.

Longer tenure enables better performance. It builds both formal and informal systems for coaching and problem-solving. It means people can make decisions without waiting for permission. And it creates a culture where people stay invested in the outcome.

We talk a lot about a “culture of innovation.” And this is how it starts. If your employees aren’t worried about being fired for every failed experiment, they’re free to think creatively and try weird new things.

But most companies never get there because their systems aren’t designed to support continuity. They’re designed to facilitate churn.

In-N-Out’s approach proves that you can design for staying power. And that kind of design thinking doesn’t just reduce HR costs. It compounds capability.

What Corporate Leaders Can Learn Beyond Fast Food

The lesson here isn’t confined to quick service restaurants. What In-N-Out built is a blueprint for how any organization can invest in longevity, culture, and capability. Not through gimmicks or apps, but through systems that respect the full depth of an individual’s contribution and potential.

This model can be applied, regardless of whether you’re leading an innovation team, a frontline operation, or an enterprise function that depends on human input. Creating an environment where employees feel empowered and a culture that enables innovation doesn’t boil down to a few perks. It’s a core of your organizational design and an investment in clear paths to personal/career growth, strong employee incentives, and true investment in their future.

And it’s a good reminder that innovation doesn’t always mean technology. Sometimes, it just means choosing to focus on people.

The Real Cost of Doing Nothing

Too many companies treat high turnover as an expense line item. It's not. It’s the cost of choosing to run systems built for churn.

Retention isn’t just an HR metric. It’s a strategic decision. If your people don’t stay, your progress doesn’t either.

Do you want people to stick around long enough to build something that lasts?

If not, no transformation plan, no product roadmap, and no restructure will matter.

The Trader Joe’s Retention Advantage

Trader Joe’s may sell groceries, but their approach to talent mirrors In-N-Out’s in key ways. Employees are paid well above industry averages. They’re eligible for benefits even as part-timers. And promotions come from within. Store managers, known as “Captains,” often started as crew members. That continuity matters. It means leadership knows the floor, the culture, and the customer.

The results are hard to ignore. Despite having smaller stores and fewer SKUs than big-box competitors, Trader Joe’s ranks among the most profitable grocery chains in America on a revenue-per-square-foot basis. Their customer loyalty is legendary. Their stores run lean. And their brand doesn’t suffer from the whiplash of constant staffing changes.

Training at Trader Joe’s isn’t outsourced or standardized across generic modules. New hires receive direct, in-person onboarding and regular check-ins with managers. There’s an intentional focus on building interpersonal skills, product knowledge, and autonomy which explains why team members are trusted to make decisions on the spot without constant escalation.

Like In-N-Out, Trader Joe’s didn’t bolt perks onto a broken system. They designed a talent strategy that assumes people will stay and made it worth their while to do so. The ROI is seen in employee satisfaction, customer experience, and long-term efficiency.

In industries where high turnover is seen as inevitable, they proved it’s not.

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