This week marked the 56th anniversary of economist Milton Friedman’s seminal capitalism manifesto in The New York Times Magazine, which declared that the primary responsibility of corporate executives is to make money for their shareholders, while obeying the law and society’s basic ethical customs.
Wall Street enthusiastically embraced Friedman’s doctrine of shareholder primacy. Then it bastardized it.
Friedman never prescribed debt-fueled share buybacks, obscene executive pay packages, quarterly earnings games, or sacrificing long-term competitiveness to goose a company’s stock price. But his doctrine provided intellectual cover for a corporate culture that increasingly equated maximizing shareholder value with maximizing the share price—and richly rewarding the executives who managed to push it higher.
What Friedman conveniently ignored—or failed to foresee—was a future of unmitigated executive greed and an uncritical business press that cheered on a generational transfer of wealth into the hands of a small financial elite. Underperforming corporate chiefs learned to game the system through financial engineering and accounting maneuvers that inflated their stock prices in the short run while gutting their core competitiveness over the long haul.
Boeing, General Electric, and General Motors stand as monuments to what became of the Friedman doctrine. These three corporations—once undisputed titans of American industrial power—lost their way because a succession of chief executives chose to appease quarterly Wall Street expectations rather than maintain operational and engineering superiority.
I thought of Milton Friedman the other day upon learning that store managers at In-N-Out Burger now average more than $200,000 a year. Under Wall Street’s bastardized version of the Friedman doctrine, In-N-Out should be paying them closer to the much lower prevailing market-clearing rate. At first blush, it would appear that Lynsi Snyder, In-N-Out’s billionaire owner and president who controls the privately owned family enterprise, is leaving a fortune on the table.
In fact, Snyder’s In-N-Out runs circles around its competitors—and it isn’t even close.
According to 2024 data from industry tracker Technomic, an average In-N-Out location generates nearly $5.8 million in annual sales. That easily eclipses the $3.96 million pulled in by the typical U.S. McDonald’s unit and soundly beats Shake Shack’s $3.87 million average.
The most devastating blow to Wall Street’s version of Friedman’s doctrine, however, sits right on the menu board.
In Los Angeles, an In-N-Out customer can pull up to the drive-thru and buy a fresh, never-frozen Double-Double for $5.90. A few miles away, a customer walking into Shake Shack pays $12.49 for a comparable two-patty Double ShackBurger—more than double the price. Even at the single-patty level, In-N-Out charges $4.10 for a cheeseburger, while Shake Shack charges $10.09.
Here is a dirty little secret that will surely incense In-N-Out’s legion of cultists: Shake Shack once had a far superior product.
I lived directly across the street from Madison Square Park in Manhattan when legendary restaurateur Danny Meyer opened his first Shake Shack kiosk in 2004, and I know firsthand how extraordinary the food was when he was actively involved. Long lines formed an hour before the counter opened and snaked through the park until closing. A Shake Shack burger was once unrivaled.
Then came Wall Street.
Meyer took Shake Shack public in January 2015, floating an equity stake that was valued at $342 million on the first day of trading. I found the chain’s subsequent decline difficult to reconcile with Meyer’s sterling reputation as an uncompromising perfectionist.
My visit to Shake Shack’s West Hollywood location a few months ago was so frustrating that I vowed never to return. Customers are now corralled toward confusing touchscreen kiosks, where I inadvertently ordered two double burgers. When the food finally arrived, the patties were slapped sloppily between the buns by staff who clearly took zero pride in their craft. The beef was dry and flavorless—so disappointing that I couldn’t even finish it.
I thought to myself that if Danny Meyer still controlled and managed Shake Shack, he’d shut the West Hollywood location down if he saw what I was served. Apparently, I wasn’t alone in my disappointment. In late summer 2024, Shake Shack shuttered six underperforming locations in California, five of which were in the greater Los Angeles area, including once-prized spots in Culver City and Silver Lake.
In-N-Out, by contrast, has closed only one location in its entire history—a profitable restaurant in Oakland that the company shuttered because rampant crime compromised the safety of its customers and crew.
One doesn’t need an MBA—and to be clear, Lynsi Snyder not only lacks a business degree but never attended college—to understand In-N-Out’s operational genius.
After graduating from a private Christian high school in Redding, California, where her family owned a ranch, Snyder bypassed higher education to work inside the family enterprise. She started at an In-N-Out restaurant at 17, doing grunt work that included preparing lettuce and slicing onions before eventually working in corporate departments including merchandising and human resources, learning the company from the pavement up.
Snyder inherited her philosophy from her grandparents, Harry and Esther Snyder, who founded the company in 1948 on a simple premise: keep the menu small, use fresh ingredients, pay above-market wages, and avoid franchises and public shareholders.
In-N-Out doesn’t hire its managers from the outside. Like Snyder, they work their way up through the restaurants, learning every station while being drilled in strict standards of cleanliness, food safety, and speed. Flipping burgers here isn’t an interchangeable, dead-end retail gig; it is an apprenticeship for a career that pays north of $200,000 a year. While public restaurant chains paper their breakrooms with slogans declaring frontline workers “family” while treating them as disposable line items, In-N-Out treats retention as an operational imperative.
That commitment sometimes transcends the balance sheet.
Years ago, I attended a storytelling competition in Los Angeles where one of the participants was a young woman who worked at In-N-Out while her husband managed a location. When her husband was diagnosed with cancer and eventually died, she recounted how In-N-Out quietly stepped in to take financial care of her and their children, providing continuous support long after he was gone. There wasn’t a dry eye in the room.
A strict reading of Friedman might regard such corporate generosity skeptically if it served no economic interest of the company’s owners. But In-N-Out exposes the flaw in the way Wall Street came to apply his doctrine. Treating employees extraordinarily well isn’t necessarily charity or corporate do-goodism. In-N-Out has demonstrated that generating institutional loyalty can also be extraordinarily good business.
Compare that to Shake Shack.
Unlike privately owned In-N-Out, Shake Shack hitched its wagon to the quarterly demands of public equity. After a decade of volatile stock performance, boardroom battles with activist hedge funds, and a $100 million share repurchase authorization to manage dilution, the C-suite responded to margin pressures the classic public-market way: shuttering underperforming stores and nudging customers toward automated ordering screens, all while charging double for a burger that is no longer the culinary work of art it once was.
Shake Shack pays its general managers standard corporate retail wages. Current company job postings advertise general-manager pay ranging from about $78,000 to $100,000, depending on the position and market—less than half what an average In-N-Out manager takes home.
Meanwhile, Shake Shack CEO Robert Lynch took home $7.2 million in total compensation in 2025—a package 323 times the $22,312 earned by the company’s median employee, who worked in one of its restaurants.
Therein lies Wall Street’s bastardization of Friedman’s doctrine: squeeze costs and demand ever greater productivity from the people operating the restaurants while lavishing rewards on executives whose compensation is increasingly tied to satisfying shareholders and lifting the stock price.
McDonald’s takes the model a step further. Where In-N-Out maintains direct operational stewardship over every kitchen, McDonald’s has offloaded roughly 95% of its restaurants to franchisees. Corporate headquarters collects royalties and rent from those operators, while franchisees shoulder much of the day-to-day risk of rising beef prices, labor costs, utilities, and local operating headaches.
In-N-Out takes the opposite approach. It doesn’t franchise its restaurants and directly employs the people operating them. There is no middleman franchisee to squeeze.
The rewards at McDonald’s flow handsomely to the top. CEO Chris Kempczinski collected $20.6 million in 2025—1,082 times the $19,020 earned by the company’s median employee.
Even more galling are the handouts in the boardroom.
A McDonald’s non-employee director receives a $120,000 annual cash retainer plus $205,000 in equity compensation, before additional compensation for certain committee chairs.
Sitting on McDonald’s board is Ford CEO Jim Farley, an executive whose day job involves managing an automaker beset by chronic, multi-billion-dollar warranty costs and quality defects—hardly anyone’s first choice to oversee standards of mass-production quality and execution. Ford ended 2025 carrying a $17.2 billion accrual for estimated future warranty and field-service costs.
And that brings us back to Milton Friedman.
In-N-Out doesn’t defy Friedman nearly as much as it defies what Wall Street turned his doctrine into. Lynsi Snyder has demonstrated that capitalism doesn’t require squeezing workers, soaking customers, or enriching executives through financial engineering to create extraordinary wealth.
Sometimes it just requires an owner who understands the discipline of the kitchen floor—and a $200,000-a-year manager who can ensure fresh ground beef is consistently cooked to perfection.