What Does the In-N-Out San Francisco Shutdown Mean for Franchises?

There is one In-N-Out Burger location in San Francisco. It was temporarily shut down last week due to a lack of checking the COVID-19 vaccination status of its customers.

On Wednesday, NPR reported on the closure and how “public health officials had informed In-N-Out several times about the proof-of-vaccination requirement but that the restaurant did not comply.” Instant compliance would have meant long lines and challenging waiting times for the burger brand without a smooth vaccine-checking process in place, which could potentially weaken the traffic to the San Francisco In-N-Out and inhibit its money-making operation.

A complete shutdown, however, has restricted its revenue even further. Restaurants facing similar protocols are forced to assess how closely they can toe the line between legal compliance and an optimal stream of revenue, while franchise brands everywhere are forced to reconsider their operation.

It is important to note that In-N-Out is not a franchise; the brand is rather a collection of corporately-owned locations. While these locations have managers who can share insights with a corporate office, they are unable to take control of their units like an actual franchise owner might be able to.

This may suggest that franchise models are better geared for navigating legal protocols — such as the one In-N-Out faced last week — and ensuring that a business is operated on an effective, individualized basis.

The vaccine-checking provisions enacted by the city of San Francisco are meant to protect customers from potential virus contact, of course. Preventing unvaccinated traffic into a restaurant is a means to ensure a company can stay operational, a measure that San Francisco has deemed essential to the operation of local businesses. This can help ensure that a restaurant’s staff stays safe and healthy.

Preventing certain customer traffic is taking control away from franchises, however, which is something that can have resounding effects within the franchising industry’s investment landscape. A lack of compliance can threaten a lack of revenue altogether, as the San Francisco In-N-Out saw last week. Government interference can weaken the investment appeal of many brands looking for sustained growth.

Some markets have tighter vaccine regulations than others, which is readily known at this point in the pandemic. It can be tough for national brands to make COVID-19 provisions on a comprehensive scale with so much variance across the country, so a lot of business protocols have been forced to follow either 1. a local or regional mandate by the book or 2. the preferences of a forward-thinking franchisee.

This may subject a franchise owner to more responsibility when it comes to protocol compliance, however. Any small misstep that leads to a conflict can mean a setback for a collective brand as a whole, which is something that many franchisors may try to prevent from happening. As provisions are continually monitored, many franchisors may be looking to take decision-making control away from franchisees.