OPINION:
California already has lost a number of its legacy companies to more business-friendly states, but when the owner of an iconic burger chain leaves for Tennessee, where she will take a chunk of employees and set up a second company headquarters, the sting has to hurt a little more.
Lynsi Snyder, the heiress of Harry and Esther Snyder’s In-N-Out Burger, says “doing business is not easy” in California, and neither is “raising a family.” To escape the constant business conflicts with authorities and the cultural upheaval that make many, including Elon Musk, uncomfortable, she is moving to Franklin, Tennessee, just outside Nashville. The company is building a 100,000-square-foot office, a little more than half as large as the current 175,475-square-foot space in Irvine.
The company also plans to open 35 restaurants in Tennessee, which has become a land of opportunity as it takes in thousands who have become disillusioned with California and businesses that have said “enough” to the state’s punitively high taxes, sclerosis-inducing regulation, job-killing mandates (including a fast-food minimum wage that has killed at least 18,000 jobs), steep housing and energy costs, crime and a judicial landscape that makes them vulnerable to lawsuit abuse.
Forgive In-N-Out if a past boycott of the chain promoted by the late California Democratic Party chair over the company’s bipartisan political giving wasn’t a point in favor of staying, either.
“It will be wonderful having an office out there,” Ms. Snyder said last week on Allie Beth Stuckey’s “Relatable” podcast. “Growing out there, and being able to have the family (and other people’s families) out there.”
In 2030, In-N-Out will relocate its West Coast headquarters from Irvine to Baldwin Park, where the company began in 1948 when the Snyders opened a small drive-thru.
However, moving a significant portion of its workforce to Tennessee to staff its “Eastern Territory” office is a not-so-subtle message to California policymakers, whether intentional or not.
In the Volunteer State, the government doesn’t tax personal income, taxes corporations at 6.5% compared with 8.84% in California, has the nation’s fourth-lowest property tax rate and is second in the American Legislative Exchange Council’s economic outlook rankings. Meanwhile, California has been buried in the bottom layer. Tennessee’s economic future has been trending upward over the past decade, from 17th in 2015 to second this year, and so has California’s, moving from dead last every year from 2013 to 2020 to 48th over the past four years.
Ms. Snyder’s legendary burger joint, a favorite of celebrated chefs with $2.1 billion in yearly sales and more than half its 418 restaurants in its home state, isn’t the first California institution to flee Sacramento’s suffocating regime. Nor is it the first Golden State burger chain to move its headquarters to more agreeable business climes. Carl’s Jr., a quintessential California brand predating In-N-Out, has closed its Anaheim headquarters and consolidated corporate operations with Hardee’s in Nashville, partly because of the rising employment costs in California. The company also reported that it had finished expanding in its native state.
Other California-born corporations, such as Wells Fargo, Hewlett-Packard (Silicon Valley’s pioneering company) and Oracle, have also left the state that once attracted businesses and innovators like no other. Once these and other companies are reestablished in other states, their costs can fall from 20% to 35%.
The flight from California is not a recent phenomenon. Relocation specialist Joe Vranich, who was once located in Irvine and is now in Texas, charted 13,000 business “disinvestment events” in California from 2008 to 2016. Economic losses caused by those relocations totaled $77 billion.
Mr. Vranich closed his business in 2023 and retired, but he rebooted it last year after watching the great California exodus grow.
California’s business environment has become hopeless, he said.
Ms. Snyder might be thinking exactly that but can’t afford to be quite so outspoken. She wouldn’t want her company to be singled out by lawmakers for retaliation.
Ms. Snyder runs a solid company supported by a loyal following. With a firm business foundation beneath her, she has the luxury of practicing patience to wait out the current anti-business era. At some point, it has to turn. If it doesn’t, someday, decades from now, customers might associate In-N-Out more with Tennessee than its birthplace on the West Coast.
• Kerry Jackson is the William Clement fellow in California reform at the Pacific Research Institute.