The enigma of the cult-creators

In-N-Out. H&M. Trader Joe’s. H-e-b White Castle.

each of these companies has a loyal following in Dallas, almost cult-like, even though each has yet to open a store here.

Their secret to preemptive success is not just a great product (though some neighbors might swear by the tastiness of a Double-Double or the ability to don this season’s faux fur on a budget). The other quality they share is that each is a family-owned private company that keeps its practices close to its vest.

“Family-owned companies don’t share a lot of information, and that’s part of the reason they get that cult following — not just the food or the product, but that there’s not a lot of information out there,” David Shelton says.

The fact that “the world is getting smaller every day” helps these companies, too, robert young says. Travel within the united States is accessible, and as more Dallasites dine at an In-N-Out on the West Coast or shop at H&M on the east Coast, more customers are created. Dallas also is home to a number of coastal emigrants, and these new residents who miss their homelands may be these companies’ best advertisers.

It’s not that these companies are ignoring Dallas. Commerical real estate experts agree that if they haven’t yet made plans to move here, they will eventually, if for no other reason than to make more money in one of the country’s retail hubs.

However, “with the precious nature of capital and money, they’re all very careful about expansions — all of them,” young says. “No one with any major concept would come to town and go into any neighborhood or key trade area unless they felt very comfortable that they can have an efficient distribution of what they do.”

In-N-Out, for example, built its empire on “a fry that tastes a certain way, a burger that tastes a certain way,” Kent arnold says. “you’ve gotta have the exact same product whether it’s here or Las Vegas.” The company has announced two locations in Dallas one at Central and Caruth Haven, another at Coit near the junction of 75 and 635 plus a few more in suburbs and ring cities.

“a company like that, doing one store doesn’t add to the moxie or panache of the brand. They need to pop up in what we’ll call ‘home run sites’ — where there’s density, access and incomes,” young says. and in order to open more than one store, In-N-Out needs a Texas distribution center. (The company says it will lease space west of Dallas along I-30 until it finds a permanent home.) any other company would also need a nearby distribution center because none of them will come to Dallas and open only one store, or even just a couple. but that’s another plus about Dallas, by the way.

“If you think about where Dallas is located, it’s the natural point for expansion,” arnold says. “From a supply point, it’s in central america, so from here they can serve a wide area.”

Meet tHe experts

Mike geisler, venture CoMMerCial Founding partner robert e young Jr., Managing direCtor oF tHe weitzMan group they may be corporate chains, but these companies know how to make us want them.

Brokerage and property management company Venture Commercial lists roughly 17 million square feet of shopping centers and represents more than 120 retailers and restaurants. It has a presence from Oak Lawn and Uptown to Burleson and Rockwall, and has leased the Plaza at Preston Center for almost 20 years.

The Weitzman Group is a commercial retail estate brokerage firm leasing 41 million square feet of retail properties throughout Texas. Cencor Realty Services, its property management and development arm, manages 20.5 million square feet of retail space throughout Texas’ major markets of Dallas, Fort Worth, Austin, Houston and San Antonio.

Hennes & Mauritz (H&M)

First store Västerås, Sweden in 1947

First u.s. store Fifth Avenue, Manhattan, N.Y., in 2000

CoMpany HoMe

Stockholm, Sweden total stores

2,000 in 37 countries, including 200 in 27 states

Closest store to dallas Des Peres, Mo. (St. Louis area), 637 miles size oF tHe new nortHpark Center FlagsHip store 24,000 square feet, slated to open in the second half of 2011 otHer FlagsHip stores in tHe u s Only three: Manhattan; Westfield Santa Anita in Arcadia, Calif.; Michigan Avenue in Chicago wHat’s tHe big deal? Sought-after by fashionistas on a budget, H&M is widely hailed as the originator of the “fast-fashion” retail format with high-volume merchandise and constantly changing styles. H&M carries both men’s and women’s clothing and accessories, plus maternity and children’s lines. The company does not have online stores in the United States — another reason its storefronts are in high demand. expert opinion “It’s a fashion-forward product for a great price obviously there’s a need and a demand for them, especially in this economy.” —kent

arnold

“In some respects, I’m surprised they haven’t gotten to Dallas more quickly because Dallas is such a huge fashion market. It’s a European company looking at the whole globe as their market, with moderate expansion in the U.S. as opposed to a fervent pace. One of the reasons we’re all impatient about it is they’re a great retailer.” —Mike geisler

“If you look at some of the most successful locations they have, they’re urban with high density, meaning a lot of people. Even though their merchandise is not extensive, they still have to do high, high, high volumes. These merchants don’t go anywhere where they think they can’t generate high sales. They will find real estate they can get at relatively low prices in their core markets. The price for a former Macy’s that closed at a mall might turn out to be pretty attractive to an H&M.” robert young

Covetedcorporations

They may be corporate chains, but these companies know how to make us want them.

IN-N-OUT

FIRST RESTAURANT Baldwin Park, Calif., in 1948

COMPANY HOME Corporate offices in Irvine, Calif., (the state where 201 of its restaurants are located)

TOTAL RESTAURANTS 251 in four states (Arizona, California, Nevada and Utah)

CLOSEST RESTAURANT Chandler, Ariz., 1,051 miles

FUTURE NORTH TEXAS LOCATIONS Former Steak ‘n Shake on Central near Caruth Haven; Coit near junction of 75 and 635; Firewheel Town Center in Garland; West Seventh in Fort Worth; Stonebriar Centre Mall in Frisco; The Village at Allen; Hurst; Las Colinas

WHAT’S THEBIG DEAL? Its food is fast, but never frozen: The company touts the fact that every hamburger patty is made fresh at one of its distribution centers. The menu is minimal — three burger options, fries, sodas and shakes — but the restaurant’s loyal cult following evangelizes an entire subset of off-themenu items with names such as “the Flying Dutchman” and “animal-style fries”.

FROM THEHORSE’S MOUTH “We are a private, family-owned company We operate all of our restaurants ourselves, and we don’t franchise, so slow growth has always been part of our strategy. The Dallas-Fort Worth metroplex is vibrant, strong, growing and filled with opportunities.We will have everything we need there — from warehouse/commissary and patty production facilities to a large, metropolitan area that those facilities can serve.Long term, we will also be able to serve other markets from that central distribution center.We are now under construction on our first two restaurants — Allen and Frisco. If everything goes well, we hope to open both in the spring. We should also start construction soon on the Caruth Haven site and, hopefully, a few others.” —CARL

VAN FLEET, PLANNING AND DEVELOPMENT VICE PRESIDENT

EXPERT OPINION

“They’ve been very tight-lipped about their expansion process. What I’ve heard is they plan to open Dallas-Fort Worth with five or six units, and open them all at the same time.” —DAVID SHELTON

“They are a cult dynamo on the West Coast. Anybody that’s been out there, they just love the whole program. Food is good, fresh, quick and efficient.” —ROBERT YOUNG

The cult of off-menu

In-N-Out’s website (in-n-out.com/ secretmenu) acknowledges the existence of its secret menu:

Double Meat “Two 100 percent pure beef patties, hand-leafed lettuce, tomato, spread, with or without onions, stacked high on a freshly baked bun.”

3 x 3 “Three 100 percent pure beef patties, hand-leafed lettuce, tomato, spread, three slices of American cheese, with or without onions, stacked high on a freshly baked bun.”

4 x 4 “Four 100 percent pure beef patties, hand-leafed lettuce, tomato, spread, Four slices of American cheese, with or without onions, stacked high on a freshly baked bun.”

Grilled Cheese “Two slices of melted American cheese, hand-leafed lettuce, tomato, spread, with or without onions on a freshly baked bun.”

Protein Style “Your favorite burger wrapped in hand-leafed lettuce, instead of a bun.”

What about our neighborhood?

We already know our neighborhood is the first place national retailers look when in expansion mode, thanks in large part to NorthPark Center — “the poster child for great retail,” says Robert Young, Managing Director of the Weitzman Group. “Anywhere around that particular area is attractive because you have high incomes and high density.”

But it’s not just the big guys sniffing around. Local mom-and-pops often have used our neighborhood as their launch pad.

“The ultimate one — and it’s gone big time — is Mi Cocina,” Young says. “They’re as desirable in any project as anyone else, but think how they first started at Preston and Forest, and the local neighborhood generated a following. It just takes some time for those things to happen.”

Young cites Gazebo Burgers at Preston andRoyal as another good example.

“They get more and more traction, and then they go into a deal into a suburban market because their brand has some traction. That’s what everybody wants,” he says.

Covetedcorporations

They may be corporate chains, but these companies know how to make us want them.

H-E-B

FIRST STORE Kerrville, Texas in 1905

COMPANY HOME San Antonio, Texas

TOTAL STORES 329 in Texas and Mexico

CLOSEST STORE Burleson, Texas, 49 miles

WHAT’S THEBIG DEAL?

Customers love H-E-B’s high-quality products, especially produce, for low prices — no customer card needed. And unlike sister store Central Market, H-E-B carries staples like Cheerios, paper plates and 12-packs of soda pop. The company is in expansion mode, but doesn’t have plans to expand beyond Texas, according to an Austin American Statesman article quoting company president and COO Craig Boyan. In the same January 2010 article, Boyan said that the company’s move into Burleson was not indicative of expansion into Dallas: “It really is to serve Central Texas better. If you were going to go into Dallas, you’d put a warehouse in Dallas.”

FROM THEHORSE’S MOUTH “Our Central Market stores are the stores that serve the Dallas area. We have our distribution network that is largely centered in South and Central Texas as well as in the Houston