In-N-Out Burger’s announcement that it plans to open stores in Tennessee by 2026 as well as an Eastern U.S. territory office in Franklin, Tennessee (just outside Nashville) could have major implications across the broader quick-service restaurant and commercial real estate categories. Despite having just under 400 company-owned locations across California, Nevada, Arizona, Utah, Texas, Oregon, and Colorado, In-N-Out has long already made a name for itself with its impressive average unit volumes (AUVs) of more than $4 million (according to Technomic’s Top 500 Chain Restaurant Report). From a visit per location standpoint, In-N-Out Burger led the industry again in 2022 according to our data, posting more than four times the average visits per location of other leading QSR and fast casual brands.
Over the past decade plus, the company has started to move away from its home state of California (where the chain has almost 270 locations) with generally encouraging results. The company entered Dallas in 2011, Austin in 2013, and San Antonio in 2014, and while visits per location in these markets have lagged the chain’s legacy locations in California, they still remain well ahead of QSR categories. It’s not uncommon for chains to see a bit of drop-off in terms of visits per location as they move away from their home markets and compete against other brands–it’s something we saw with Portillo’s when we first looked at its expansion beyond the Chicago market–and the results from Dallas, Austin, and San Antonio are roughly on par with other brands we’ve analyzed in the past (even factoring in increased competition in these markets from Whataburger, one of our 10 Top Retail Brands to Watch in 2023). However, looking at In-N-Out’s most nascent markets, we see that visits per location trends have improved, with Houston (which it entered in 2019) on par with national averages and Denver (which it entered in 2020) running well ahead of chain averages (below).
The success of these newer markets suggests that “cult” status of the brand may be growing, and suggests that the chain is set for big numbers as it arrives in Tennessee and other adjacent states (Restaurant Business noted Arkansas, Mississippi, Louisiana and Oklahoma as possible states for expansion beyond Tennessee). Of course, chains run the risk of diluting their brand when they enter a new territory, but we’d expect In-N-Out Burger to strike a balance between building enough locations in a market to gain scale efficiencies but not diminishing the brand by over-expanding (Dallas is a good example, as it’s taken the chain roughly a decade to reach almost 25 locations).
Where might we see In-N-Out Burger in Tennessee? We looked at some prospective locations that had similar trade area populations, competitive densities, and demographic fits and found that properties like the CoolSprings Galleria (coincidentally near the planned territory office), The Mall at Green Hills (Nashville), and Opry Mills (Nashville) screen very well. We will update our analysis as the brand's expansion plans continue to materialize.