5 likely reasons why In-N-Out chose Colorado Springs over Denver

By Rich Laden Updated: December 11, 2017 at 11:07 am • Published: December 7, 2017 0
photo - A Double- Double burger with fries Animal Style at the IN-N-OUT Burgers in San Jose Feb. 6, 2016. (The Gazette, Christian Murdock)
A Double- Double burger with fries Animal Style at the IN-N-OUT Burgers in San Jose Feb. 6, 2016. (The Gazette, Christian Murdock)

The Denver area's economic development successes of recent years tower a mile high over Colorado Springs.

Apple is hiring software engineers in Denver; defense contractor Lockheed Martin plans a state-of-the-art factory in Jefferson County; and online giant Amazon is adding a second fulfillment center in Thornton to go with one in Aurora.

And those are just names you'd recognize. Dozens of lesser-known tech, professional service and financial companies are moving to, or expanding in, metro Denver.

But when California's uber popular In-N-Out Burger said last month it would come to Colorado, it also announced it would build its regional headquarters in Colorado Springs - and not Denver - making local business and political leaders as happy as if they'd won a lifetime supply of the chain's signature double-double burgers.

In-N-Out plans a multimillion-dollar patty production facility and distribution center, along with offices, at Victory Ridge, a mixed-used development southeast of InterQuest and Voyager parkways on the Springs' far north side. The operation is expected to serve Colorado and adjacent states. And In-N-Out's first Colorado restaurant will open at Victory Ridge.

"We're not only getting a unique restaurant . but we also are getting a food processing plant that will heighten the distribution of their products throughout the state of Colorado, and hopefully to southern Wyoming and northern New Mexico," said Jeff Greene, Mayor John Suthers' chief of staff.

Colorado will join California, Arizona, Nevada, Oregon, Utah and Texas as home to In-N-Out, whose more than 300 restaurants have a cult-like following for its burgers, fries and shakes. The chain's first local restaurant, however, might not open until 2020, after production and distribution facilities are built.

But at the risk of sounding dismissive of its economic development strengths, why Colorado Springs and not red-hot Denver?

"It seems a bit odd to me that they would choose the Springs," said John Imbergamo, a restaurant industry consultant in Denver. "Not because there's something wrong with the Springs. But just because, logistically, you'd probably want to locate your distribution center as close as possible to the bulk of your restaurants." And more locations probably will be in the Denver area, he said.

Perhaps. But based on interviews with city officials, local commercial real estate experts, Victory Ridge's developer and comments from In-N-Out officials and past interviews with its executives, here are some likely reasons the Springs won out over Denver:

1) Location. Since the first In-N-Out opened outside Los Angeles in 1948, the chain has marketed itself as a home for quality food. That's not just a slogan; it's a business plan.

The chain secures local supplies of beef, produces fresh patties at its plants and ships them in refrigerated trucks to restaurants within 300 to 350 miles. Patties are never frozen, and restaurants don't have freezers, microwaves or heat lamps - requiring strategically located production and distribution facilities that are a day or two away.

Colorado Springs' central location better fits that requirement than Denver, commercial real estate experts said. And Victory Ridge is five minutes from Interstate 25, allowing In-N-Out trucks to reach most of the state's population along the Front Range and Wyoming and New Mexico.

"As we looked at different properties in the area, we simply felt the site in north Colorado Springs suited our needs perfectly," Denny Warnick, In-N-Out vice president of operations, said via email. "It is in a great community, in an area of growth and it is positioned well for serving additional markets in the future."

2) Land availability and costs. In-N-Out won't complete its Victory Ridge purchase until early 2018, said Andy Klein, a principal with site developer Westside Investment Partners of suburban Denver.

The availability of a large north-side parcel no doubt helped attract In-N-Out, commercial real estate industry members said. Much of Victory Ridge, a 153-acre commercial and residential project, has gone undeveloped; the site's original developer declared bankruptcy in 2010, and the project - formerly Colorado Crossing - is being revived by Westside.

A 14-screen movie theater complex opened in November at the site. Eventually, Westside envisions more than 500 residences, 1.6 million square feet of commercial space and a sports complex.

Westside paid $22.1 million for the 153 acres last year. One commercial real estate broker speculated Westside's discounted purchase price allowed it to pass on cheaper costs to In-N-Out. Klein, however, said In-N-Out's price for land at Victory Ridge won't be much less than in Denver.

"They do want to be in Colorado Springs," he said. "They could have found a cheaper alternative to our land."

- 3) A popular spot. Besides Victory Ridge, nearby north-side developments include the InterQuest Commons and InterQuest Marketplace retail centers. The area is one of the Springs' fastest-growing commercial hubs and a logical place for In-N-Out to land.

Hotels, restaurants, entertainment and apartments are flocking to the area. The Bal Seal Engineering manufacturing plant is across the street from Victory Ridge, and Progressive Insurance, FedEx and USAA have operations nearby.

"It's a good decision and shows the strength of that area," said Colorado Springs Commercial's Mark Useman, who markets InterQuest Commons. "It will bolster the interest of other users who want to go into that area."

4) A good place to do business. Colorado Springs' quality of life can't be ignored, Klein said. Employers also like the loyalty of local workers; they experience less turnover, which holds down training costs, he said.

The Suthers administration and City Council have shown themselves to be pro-business, Klein added. Business leaders had complained in the past that the Springs' reputation for infighting between former Mayor Steve Bach and the past council turned off employers.

The Springs' pro-business attitude "is really refreshing," Klein said. "The ability to get things done quickly. Don't underestimate how important it is that the city has a pro-growth mayor and staff."

- 5) In-N-Out's Pikes Peak region connection. In-N-Out owner Lynsi Snyder, the granddaughter of founders Harry and Esther Snyder, inherited the remaining 50 percent of the company this year when she turned 35, according to Business Insider and other publications.

Last year, the Pikes Peak Courier reported Snyder paid $4.25 million for 685 acres in scenic Teller County, which Snyder confirmed via email to the weekly newspaper.

Did her familiarity with the area play a role in In-N-Out's decision to come to the Springs? In an email to The Gazette, Snyder didn't directly connect the two.

"For me personally, this is a great move and I'm looking forward to spending more time in Colorado. "I've always loved it there - the beautiful mountains and forests, the change of seasons, the incredible range of outdoor activities, the more relaxed pace and the focus on family. I've spent a lot of time there as a visitor because these are all things I value, so I'm excited and happy to now be a real part of the amazing family and business communities of the Centennial State."

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