In-N-Out Burger (25 page)

It was a tragic ending for a man for whom life had offered so many opportunities. Unable to measure up to his father's expectations, long in the shadow of his younger brother, unable to shake his substance abuse, Guy sank into a life of drugs and despair. Following Guy's death, the American and California flags and another with the words “Don't Tread on Me” flew at half-staff outside In-N-Out's Baldwin Park headquarters. “It was sad and kind of shocking when he died,” said old friend Paul Althouse. “That boy had everything, and all that money.” Later he wistfully exclaimed, “He was a hell of a guy. The drugs screwed up his life.”

The Los Angeles County Coroner's office performed an autopsy on Guy at 10:30 a.m. on December 5, 1999. His body betrayed numerous medical problems and a history of drug abuse (specifically opiates and methadone). The attending coroner, Dr. Ogbonna Chinwah, found Guy's bloated body wracked with scars, bruises, and evidence of track marks on his arms. He had had an irregular heartbeat and an enlarged heart as well as active Hepatitis B and inactive C. The coroner declared that the cause of death was an accidental overdose of the drug hydro-codone, the synthetic opiate found in the painkiller Vicodin.

On February 6, 2000, two months after Guy died, the story of his arrest in Claremont three years earlier surfaced publicly. It appeared in a lengthy obituary that ran in the
Orange County Register
with the headline: “The CEO of In-N-Out Fought Drug Use and an Injury that Quashed His Racing Dreams.”

 

Unlike the large public memorial given following the death of his younger brother, Rich Snyder, Guy's service was a strictly private affair. It was Lynda Snyder who made the arrangements for the family-only funeral; Guy was buried in his red In-N-Out racing jersey. Lynda's brother-in-law, an ordained minister, performed the service. A small memorial was held at the Pomona Raceway—among the attendees were Esther, Guy's racing team, his ex-wife, Lynda, their daughter Lynsi, and his former stepdaughters and their husbands. Wilbur Stites's widow, Kim, and their daughter Meredith were also there. It was the third time in twenty years that Esther had buried a son.

The Tuesday following Guy's death, In-N-Out's corporate lawyers called Jerry Darien to tell him they were pulling the plug on the Top Fuel team sponsorship.

There seemed to be a lot of blame and ill-feeling surrounding Guy's last days. Lynda and Mark Taylor excluded several friends and family members from the memorial. Many of Guy's friends, including those from his high school days, were barred. Significantly, the Wright family was also excluded. Kathy Touché said that she received a phone call from Taylor informing her that she was not welcome. “They didn't allow my folks to go either,” she sniffed, “and they loved the hell out of him, it was cruel. Not much Christianity there.”

At the time of Guy Snyder's death, In-N-Out Burger had grown to 140 stores, employing about sixty-five hundred employees. It was earning an estimated $212 million anually, an 8.7 percent increase from the previous year. Actually, in the six years between the time that Guy was named chairman following his brother Rich's death in 1993, the chain's revenue had jumped almost 83 percent. In-N-Out had pushed out geographically to Nevada and was about to move into Arizona. It had earned the unfettered loyalty of its customers, envy from its competitors, and plaudits in every imaginable category. When asked to characterize the mark that Guy Snyder left on the beloved chain, an insider remarked, “He just didn't change a thing. He knew well enough to just leave it alone.”

At seventy-nine, Esther Snyder stepped up to assume control of the chain that she had founded with her husband more than half a century earlier. “Don't let her age fool you,” exclaimed Mark Taylor, who quickly began taking on a more prominent role in the company, to the
Los Angeles Times
. “She is as sharp as a tack. She is the hardest-working Snyder there ever was. She remains the president and is our leader and has all of our support.”

Taylor's florid assurances did little to quash speculation about the future of In-N-Out. The chain that had for decades said little about itself was too often the subject of conjecture. And from the outside, at least, the company appeared vulnerable—just as it had six years earlier following the death of Rich Snyder. After all, the chain's sole heiress, Lynsi Snyder, was still in high school, just five months shy of her eighteenth birthday; Esther was fast approaching her ninth decade. Despite Esther's obvious determination and spirit, her old friend Carl Karcher voiced the concerns of many when he told the
Los Angeles Times
, “Esther is very, very tired. She's really had her ups and downs.”

In the days following Guy's death, a group of experts with little to no connection to In-N-Out expressed theories as to what would happen next. Two camps emerged. The first raked over the complicated issue of succession. The second promoted the idea of a sell-off.
Bill Carlino, managing editor of the
Nation's Restaurant News
, stood with the latter faction. “I'm sure there would be no shortage of potential buyers,” he remarked. “People would love to have a concept like that in their portfolio.”

Historically, the statistics did not favor companies like In-N-Out Burger remaining intact. According to the Family Business Forum at the University of North Carolina, only 30 percent of all family businesses are successfully transferred to the second generation, while only 12 percent make it to the third. After that, less than 3 percent make a successful transition to the fourth generation. Moreover, usually a family business has several branches of descendants—siblings and others to whom the baton can be passed. At In-N-Out, there were only two family members remaining: an aging Esther Snyder and her teenaged granddaughter, Lynsi.

By the time that Guy Snyder died, family-owned burger joints like In-N-Out were a thing of the past. Only a very few had survived through the decades, the Apple Pan in West Los Angeles or Louis's Lunch in New Haven, Connecticut, among them. First opened as a lunch wagon in 1895, Louis's (among many others) claims to have invented the hamburger sandwich. Few had grown into a chain like In-N-Out while remaining both independent and iconic. Most of Harry and Esther Snyder's pioneering contemporaries had disappeared or were absorbed into the $107.1 billion fast-food industry.

The old-fashioned values that In-N-Out Burger represented were being resurrected in theme restaurants like Johnny Rockets, a successful chain of retro diners. Established in 1986 by the late Ronn Teitelbaum, a former clothing retailer, Johnny Rockets sold burgers and shakes in a re-creation of a postwar Southern California diner complete with tabletop jukeboxes, a U-Shaped counter, and padded booths. (The Apple Pan's Martha Gamble later claimed that Teitelbaum modeled Johnny Rockets after her family's West Los Angeles restaurant. Once, she said, she found him rummaging around in her garbage, checking out the brand of tuna they used.)

But in 1995, with about sixty shops, Teitelbaum sold his business to an investment group led by the New York venture capital firm
Patricof & Co. in a $35 million buyout deal. Twelve years later, Red Zone Capital Fund II (the private equity firm of Washington Red-skins owner Daniel Snyder) purchased the chain for $126 million. By then there were 213 stores across the United States and overseas in Dubai, Mexico, and the Bahamas, as well as eight ships within the Royal Caribbean Cruise Lines. The new owners hoped to expand the chain further and build smaller, cheaper Johnny Rockets in places like airport terminals.

Sell-offs and franchising had been central elements of the fast-food game since the 1950s. More than forty years later, a new twist emerged, and all of the standard norms of business were being broken. The week that Guy Snyder died, the
Los Angeles Times
was dominated by news of the “new economy” propelled by technology. The newspaper proclaimed that the Internet was a “gold mine,” and headlines trumpeted “Rally Heard Round the World, Dow Jones Industrial Average Skyrockets as Bull Market Continues,” and “Strong Job, Pay Figures Fuel Stock Market Rise.”

The game had changed. Up in Silicon Valley, a five-and-a-half-hour drive north of Baldwin Park, new paper millionaires were being minted by the busload. The idea of building a small company and watching it grow over the long haul had become passé. Everyone was looking for a quick fortune, cashing in and cashing out. Company loyalty was a longtime thing of the past. Employees were trading jobs like baseball cards, hiring themselves out to the highest bidder in exchange for a drawer full of stock options.

In-N-Out Burger had long operated in its own orbit. A more-than-capable bench of managers led the chain; dedicated to the principles outlined by the Snyders, many of them had been at the company for decades. The immediate transition was neither as troubled nor uncertain as some might have expected (or even hoped). As Carl Van Fleet, the company's vice president of operations, told the
Los Angeles Times
, “We have a team of people out in our stores that are all similarly committed, and I think that goes a real, real long way and speaks to how we have gotten through the tragedies.” With the present taken care of, it was the future that everyone else thought was up for grabs.

 

Inside the company's headquarters, grief and recriminations filled the air. Less than a week after Guy's death, Tom Wright was told that his services were no longer required. Wright was asked to resign from the company, the board, and as a co-successor-trustee of the family trusts, and was given a severance package.

Guy's death put the successor order over the family trusts into effect. Tom Wright was off the list, and soon thereafter Doug Ammerman resigned as a cotrustee as well. According to one account, the reason given was potential conflict of interest (Ammerman later went on to serve on the boards of Carl Karcher Enterprises and the casual clothing company Quicksilver). That left Richard Boyd. With Wright and Ammerman out, Mark Taylor was installed. The two men became trust cotrustees as well as co-executors of Guy Snyder's estate.

Boyd and Taylor were responsible for administering considerable assets, including nearly two-thirds of the company's private stock, for the eventual inheritance of Lynsi Snyder. Under the terms of both the Esther L. Snyder Trust and the Lynsi L. Snyder Trust, Lynsi would not begin to receive shares of each of the trusts until she turned twenty-five, and then only on a staggered basis: the first third of the shares would be dispersed upon Lynsi's twenty-fifth birthday; at thirty she would receive one-half of the remaining shares; and at thirty-five years old, she would receive the balance of the shares. Under the terms of the trusts, as cotrustees, Boyd and Taylor each had the power to vote one-half of the stock. It wasn't long before the shared responsibilities between Boyd and Taylor led to an exchange of legal blows.

When her father died, Lynsi also became the sole beneficiary of the Harry Guy Snyder Testamentary Trust. By 2005, the trust's assets were worth in excess of $12 million. Its primary assets were a 70 percent interest in Snyder Leasing and a 41.67 percent interest in Snyder Properties, a California general partnership that owned a commercial building and land in Riverside as well as interests in a string of residential and commercial properties in California, as well as 80 shares of common stock in the Garden Grove In-N-Out Burger
and 1,175 shares of common stock in the In-N-Out store in Fontana. Lynsi's inheritance also included cash, various properties, shares of stock in several security instruments, 1,000 shares in Flying Dutchman Racing Inc., and her father's extensive collection of cars and other vehicles (Guy put in a stipulation that his daughter not receive any of his Porsches until she reached the age of twenty-one). Lynsi was entitled to a third of this trust upon turning thirty, an additional third at thirty-five, and the remainder upon turning forty.

Guy's thirteen-page last will and testament, signed on May 18, 1999 (less than seven months before his death), left his first wife, Lynda, his former stepdaughters, and their husbands (including Mark Taylor) with nothing. Except for provisions naming Lynda Snyder guardian of the estate of their minor daughter, Lynsi, and allowing for financial “expenditures necessary for the benefit of the minor child,” his ex-wife and her family were effectively cut out. “He did not leave them a dime,” explained one friend. “He felt they turned their backs on him.”

Guy did bequeath gifts to a select few. He gave cash totaling $43,000 in varying amounts to a group of four friends, and his Harley-Davidson motorcycles to one of them. Tom Wright received Guy's Glock pistol, a Desert Eagle .45 caliber pistol, and $50,000 in cash. Guy left Tom and Dale Wright's daughters Robin and Darci joint ownership of his Pontiac. However, according to Dale, Lynda stepped in and said she still had title to the Pontiac and refused to relinquish the car to her nieces.

Perhaps underlining just how close the two men had become, earlier Guy had named Wright as the executor and trustee of his estate.

 

All eyes were on Esther. Since breaking her hip while in Redding for the store opening and an extended visit with her granddaughter, Lynsi, about two years earlier, Esther had been in ill health. The break required at least two surgeries and physical therapy. She ended up with an infection that left her severely weakened, and she was placed in a convalescence home in Northern California where she stayed
for the better part of a year. She remained fragile, often needing the assistance of a cane or a walker, and at times she used a wheelchair to get around. Esther's movements had become painfully labored. Years earlier she had undergone heart surgery, and now a host of other health problems had developed.

As a result, her daily routine was curtailed significantly. No longer able to drive each weekend to Costa Mesa to attend church services at the Calvary Chapel, she often listened to the pastor's sermons on audio and videotapes. She now needed a driver to chauffeur her to the company's headquarters in Baldwin Park or Irvine. Often she worked out of her Glendora home, a ranch house shaded by oak trees and fronted by a white fence and a mailbox that was a miniature version of the main house. There she maintained a vigilant oversight over the company's financial affairs and tended to a host of civic and philanthropic activities (including the In-N-Out Foundation).

Frequently housebound, Esther was consulted by managers on company matters. Board meetings were conducted in her living room or via phone. A crew from
Burger Television
traveled to Glendora. She gave rallying speeches to be shown to the chain's associates. Weakened but not incapacitated, Esther insisted on being involved in all of the chain's decisions. Whenever she could, Esther continued to visit the stores, ordering a burger through the drive-through and taking it apart to make sure the bun was properly toasted and the tomatoes placed correctly (and that the associates were smiling and friendly).

Owing to her failing health, in February 2000, Esther bowed out of attending the company's annual black-tie dinner at the Disneyland Hotel. Each year she addressed the associates at the big fete and that year, although she wasn't present, Esther gave her speech through a speakerphone. Transcendently popular, the group gave her a thunderous standing ovation. Several months after the dinner, Caroline Haley, a fifteen-year associate and manager of the In-N-Out near the Los Angeles International Airport, told the
Los Angeles Times
, “She's wonderful. She's so into the people of the company.” Haley—who
shocked her parents when she quit college to move up the ladder at the burger chain—explained, “It really goes back to her and her husband's commitment to take care of the people.”

A private woman, Esther rarely spoke of the heartbreaking loss of her husband and her sons. A gentle and gracious soul, it was her faith that kept her steady through all of the emotional upheavals, and she refused to dwell on the difficulties or losses that plagued her. Meredith Stites, who grew up as Esther's granddaughter, called her an incredibly humble woman. “Grandma was always very loving, so happy and grateful for everything,” she said. “She lost everybody in her family, but she still believed in God. She had all those things happen, but she had such a great outlook on life.”

Optimistic by nature, Esther, with her positive outlook, was a comfort to those around her. She was always expressing her gratitude for what the Lord had given her. “She thanked the good Lord that she still had her eyes to read her books,” her friend Wolf Kahles remembered her saying often.

Kahles, a German businessman from Bietigheim-Bissingen, a town fourteen miles north of Stuttgart, first met Esther in 1999 through a mutual friend. At the time, he owned Kentucky Fried Chicken and Pizza Hut franchises in Germany. The meeting took place at her home. She was still recovering from her hip surgery and needed a walker, but, he recalled, “she opened the door herself, there was no maid.” And he remembered, “She had all of her business papers on the dining room table and she was working there.”

With Kahles's son studying at a private boys' boarding high school in Claremont, he made a point of calling on Esther whenever he came to visit. The two developed a friendship. “She was this beautiful, fantastic human being,” he said. She was very proud of In-N-Out. “It was her business that she built up with her husband,” he said. “She looked after every detail. It wasn't about the money for her, but about her associates in the business being happy.”