The hamburger brand 'In-N-Out Burger,' representing the United States, is leaving California, where it has rooted for 77 years since its founding.
The In-N-Out management cited increasingly stringent state government regulations and deteriorating public safety as reasons for the transfer of its headquarters. There have even been remarks that 'the Democratic stronghold is becoming a graveyard for corporations' as policy experiments led by the progressive camp clash with the logic of corporate survival.
On the 21st (local time), In-N-Out drew the attention of the U.S. industry due to the so-called headquarters transfer issue. Lynsi Snyder (43), granddaughter of the founder and the current owner, declared in a recent podcast interview that she would move the headquarters to Tennessee and relocate herself as well.
Snyder said, 'California has many good points, but raising children or doing business here is no longer easy.'
Snyder is the only granddaughter of the founders. After her father and uncle passed away in succession, she became president at a young age in her 20s in 2010. Since then, she has successfully led In-N-Out. She is now considered one of the most successful young female entrepreneurs in the United States, surpassing simple second-generation management. She was listed as the youngest female billionaire in the U.S. in 2013. According to the Bloomberg Billionaires Index, her net worth amounts to $7.3 billion (about 10 trillion won). If she relocates to Tennessee, Snyder will instantly become the richest woman in Tennessee.
The reason young female corporate leader declared 탈(脫)캘리포니아 is attributed to the increasingly stringent California state government regulations and soaring crime rates.
Snyder cited the vaccine proof mandate in San Francisco during the pandemic as an example in her podcast. At that time, In-N-Out vigorously opposed the government directive accommodating consumer discrimination, stating, 'We firmly oppose the government orders that force private companies to discriminate against consumers,' and refused to check proof of vaccination. The city authorities retaliated by temporarily shutting down the store. Snyder expressed discontent, stating that the government excessively intervened in corporate operations. She contended that it was a matter directly related to management philosophy beyond just the health guidelines.
Deteriorating public safety cemented the previous decision. Over the past 77 years, In-N-Out opened more than 420 stores across the United States without closing a single one. However, in March, In-N-Out made the difficult decision to permanently close its Oakland branch for the first time since its founding. In 2023, the number of violent crimes in Oakland surged by 38% compared to the previous year, and vehicle theft increased by 44%. Snyder stated in an interview, 'There have been occasions when bullets came through store windows, and there were incidents of stabbing inside stores,' adding that 'it was an unavoidable decision for the safety of employees and consumers.'
This decision is not unrelated to the unique conservative, Christian management philosophy that In-N-Out has maintained for a long time. In-N-Out is a staunchly pro-Christian company to the extent of inscribing biblical verses, such as John 3:16, in small print on hamburger wrappers and beverage cup bottoms. In 2017 and 2018, the company was revealed to have made political donations to the Republican Party, leading to boycotts in California, where the Democratic Party holds significant power.
Despite such controversies, In-N-Out is known as a good company that offers industry-leading wages and benefits. According to Glassdoor, the largest employment information site in the United States, In-N-Out ranked 6th in the list of '100 Best Companies to Work For' last year, and Forbes has consistently included In-N-Out in its list of 'America's Best Employers.'
However, In-N-Out has faced strong pressure to maintain its capital soundness since the California state government abruptly raised the minimum wage this year. Starting in April, California implemented legislation (AB 1228) that increased the minimum wage for large fast-food chains by 25%, from $16 an hour to $20.
Once, California was referred to as the land of opportunity within the United States. Silicon Valley near San Francisco thrived as a cradle for startups.
Now, California is transforming into a 'graveyard for corporations.' Businesses are leaving California to escape high taxes, excessive regulations, and a crippling cost of living. The neologism 'Calexit' combining 'California' and 'Exodus' has established itself as a trend. Major IT companies like Tesla, Oracle, and Hewlett-Packard have already moved their headquarters to places like Texas. Recently, even prominent manufacturing giants like Toyota's North American subsidiary have turned their backs on California.
The Hoover Institution at Stanford University stated in a report that 'California is the hardest state to do business in the U.S.,' noting that 'high taxes and excessive labor and environmental regulations are driving companies to competitive states like Texas and Tennessee.' The report pointed out that the state government has a prevalent anti-corporate sentiment, viewing businesses not as growth partners but as targets for taxation and control.
Tennessee, which In-N-Out has chosen as its new home, is a red state (a Republican stronghold) with an opposite disposition to California. Unlike California, which has the highest corporate tax rate in the U.S., Tennessee has no corporate or personal income tax. It is relatively low in environmental and employment-related regulations, making it a 'business-friendly state.' In-N-Out built its production base and logistics center in Southern Texas in 2011 and expanded its stores to other states such as Texas, Nevada, Arizona, Utah, Oregon, Colorado, and Idaho based on it.
Even after transferring its headquarters to Tennessee, California remains an overwhelmingly core market for In-N-Out in terms of the number of stores and sales. Out of a total of 418 stores, 281, or 70%, are located in California. Snyder stated, '(California) does not change its core market status.' Some experts interpret this transfer as a strategic move to hedge the management risks concentrated in California and establish a new growth base.
U.S. economic media Fortune evaluated this as 'a symbolic case showing how the deepening political and economic environment differences within the U.S. affect long-term strategies of corporations,' citing experts.