White Castle Systems, Inc.

views updated May 18 2018

White Castle Systems, Inc.

P.O. Box 1498
Columbus, Ohio 43216–1498
U.S.A
(614) 228–5781
Fax: (614) 464–0596

Private Company
Incorporated: 1924 as the White Castle System of Eating
Houses Corporation
Employees: 9,700
Sales: $307 million
SICs: 5812 Eating Places; 3444 Sheet Metal Work

White Castle Systems, Inc. operates the ninth largest hamburger chain in the United States, with 287 restaurants located primarily in urban areas throughout the Midwest and Northeast, as well as a small number of restaurants in Japan and other Pacific Rim countries. Unlike most hamburger chains, White Castle’s U.S. restaurants are not franchised; all units are owned and operated by White Castle Systems, of which the E.W. Ingram family has been sole proprietor since 1933. In the mid-1990s, E.W. Ingram III—grandson of founder E.W. Ingram—directed the company as chairperson, president, and CEO, while his father, E.W. Ingram Jr., held the position of chairman emeritus.

White Castle Systems also owns and operates its own bakeries and meat processing plants. Its subsidiary, Porcelain Steel Building Company, manufactures White Castle restaurant equipment. Another subsidiary, White Castle Distributing, markets and distributes frozen White Castle hamburgers to supermarkets nationwide. The company prides itself on its generous employee benefit plans and a turnover rate that is unusually low for the fast food industry.

Although primarily known for its square hamburgers, White Castle also offers cheeseburgers, chicken sandwiches, french fries, onion rings, breakfast meals, and dessert pastries. In its 75 years of operation, White Castle hamburgers have developed an image that sets them apart from other fast-food burgers. The pop music group The Beastie Boys sang an ode to the sandwiches in the 1980s, and the Canadian pop group The Smithereens wrote “White Castle Blues” several years later. According to a Columbus Monthly story on the seventieth anniversary of the company, “Public opinion about the hamburgers [which sell at a rate of 480 million a year] seems to fall into three categories: Those who swear by the things, those who detest them, and those who haven’t tried them out of fear or lack of opportunity and are waiting to be included in the first two categories.”

White Castle hamburgers have such nicknames as Sliders, Gut Bombs, Castles, Whitey–One–Bites and Belly Busters, and in recent years, the company’s marketing team has capitalized on this image. Company publicity refers to the hamburgers as “Sliders” and has even stated that “the full impact of eating White Castle hamburgers normally isn’t felt until the day after.” The company also sponsors contests for recipes incorporating White Castle hamburgers and sells clothing emblazoned with the White Castle logo or its “Slider” nickname.

The distinctive taste of White Castle hamburgers is attributed to one of the restaurant’s co–founders, Walter Anderson. Anderson worked in a Wichita, Kansas, restaurant and had perfected a unique way of cooking hamburger patties, adding shredded onions and placing both halves of the bun over the sizzling meat. In 1916, he rented a remodeled streetcar, bought a griddle plate and refrigerator, and opened his own hamburger stand. Using the slogan “buy ’em by the sack,” Anderson sold a good number of hamburgers.

By 1921, he had three hamburger stands in operation and was looking to finance the opening of a fourth. That year, he met E.W. “Billy” Ingram, a real–estate and insurance broker. With a $700 loan, the two founded the first White Castle restaurant, an 11–by 16–foot cement block structure that resembled a small castle, complete with turrets and battlements.

At that time, hamburgers were a relatively novel food item, sold at fairs, amusement parks, carnivals, and some restaurants. Very few hamburger stands were in operation, and the ones that were had reputations as unclean purveyors of products that were less than 100 percent pure beef. According to a speech by Ingram at a 1964 Newcomen Society meeting in Columbus, Ohio, his and Anderson’s goal was to “break down a deep–rooted prejudice against the hamburger by constantly improving its quality and serving it in clean and sanitary surroundings.” He added that the two chose the name White Castle, because “‘White’ signifies purity and cleanliness and ‘Castle’ represents strength, permanence and stability.”

The two established a motto: “Serve the finest products, for the least cost, in the cleanest surroundings, with the most courteous personnel.” The two also had another motto: “He who owes no money will never go broke.” Within 90 days of opening its first restaurant, the firm of Anderson and Ingram repaid its debt. Profits were fueled back into the organization, and more restaurants were opened. In 1924, Anderson and Ingram incorporated their company as the White Castle System of Eating Houses Corporation. Competing hamburger stands inspired by the success of White Castle popped up all over Wichita, run by theater operators, real–estate brokers, and even Ingram’s own dentist.

Between 1923 and 1931, White Castle Systems established 100 restaurants in cities across the Midwest. In his speech to the Newcomen Society, Ingram claimed that in each city where they opened a restaurant, “We searched carefully but did not find any places specializing in the sales of hamburger sandwiches.” He went on to add that White Castle created its own competition.

In its early years, White Castle also focused on the quality of its coffee. “We try to serve the best coffee in town” signs were hung in each restaurant, earnestly stating a company goal during the first 30 years of business. Indeed, White Castle took this statement seriously, setting uniform standards throughout its restaurant system. Adherence was maintained using a hydrometer created especially for White Castle coffee.

In keeping with trends in the burgeoning foodservice industry, White Castle was also concerned about the nutritional value of its hamburgers. The company hired the head of the physiological chemistry department at a Big 10 university to spend a summer studying the food value of its burgers. The chemist hired a student as test subject, asking him to eat nothing but White Castle hamburgers for the entire summer. At the end of the period, the student was found to be in good health, despite the fact that he was “eating 20 to 24 hamburgers a day during the last few weeks.” The professor recommended that calcium be added to the flour used in the buns and suggested a specific weight ratio of meat to bun to provide a more nutritious balance of proteins, carbohydrates, and fat. White Castle complied, and altered its recipe only slightly since that time.

In 1931, White Castle became the first fast food restaurant to advertise in a newspaper. Ingram and Anderson chose to concentrate on generating new carry–out business, as counter space inside the restaurant was limited to under 20 seats. Using Anderson’s “buy ’em by the sack” slogan, White Castle ran a quarter–page ad in two St. Louis evening newspapers. Included in the advertisement was a coupon offering five hamburgers for a dime between two o’clock p.m. and midnight on the following Saturday. The advertisement was a success. By two p.m. that Saturday, most White Castles had lines forming outside their take–out windows. Within an hour, some operations had run out of buns. Supply houses had to work overtime to produce buns and burgers to meet the demand. Buoyed by the achievements of their original advertisement, Ingram and Anderson continued the practice, making coupons valid for 24–hour periods, to prevent the flood of customers they experienced the first time.

1931 was a year of innovations for the company. While there was no doubt that Anderson’s “buy ’em by the sack” slogan was successful, a problem arose in that the burgers at the bottom of a sack full of hamburgers would often be crushed by the time a customer arrived at his destination. To prevent this from happening, White Castle developed cardboard cartons with heat–resistant linings—the first paper cartons used in the food industry. The company then expanded this concept to include cardboard containers for hot and cold drinks, french fries, and pie.

Other innovations introduced during this time included improving the quality and safety of beef through the use of frozen hamburger patties, as well as a patented coffee mug design and exhaust systems and specially designed griddles in the restaurants. In 1932, White Castle incorporated its first subsidiary, the Paperlynen Company, to manufacture paper hats worn by White Castle employees. Company engineers had developed a machine that manufactured paper hats so quickly that one machine could make enough hats in two weeks to supply the entire White Castle chain for a year. Realizing they had a potentially profitable business on their hands, the company began marketing the paper caps to other foodservice establishments. By 1964, Paperlynen was selling over 54 million caps worldwide a year.

As part of its marketing drive in the early 1930s, White Castle also began a campaign “to upgrade the image of the hamburger” in the minds of housewives. In each city where White Castles were located, the company hired hostesses who went by the name of “Julia Joyce.” Julia Joyce would guide housewives on tours of their local White Castle, allowing them to examine the cleanliness of White Castle kitchens and the sanitary manner in which hamburgers were cooked. After the housewives finished their tour, the hostess presented each with a coupon offering five carry–out hamburgers for ten cents redeemable immediately, as well a coupon for children, valid the following Saturday. Julia Joyce also set up meetings with local women’s clubs where she served hamburgers, coffee, soft drinks, and pie in carryout containers and then went on to explain how White Castle’s carry–out service could be used for families or club outings.

Perhaps one of White Castle’s most unusual innovations was the design and construction of semi–permanent restaurants that could be easily transported from one location to another. Because White Castles were relatively small (15 feet by 11 feet), many landlords refused to lease such a scant parcel of land for over 30 days. Ingram came up with idea of developing a building that could be moved, thus preventing the loss of a building when landlords refused to renew the restaurant’s lease. In 1928, Ingram hired L.W. Ray to patent a movable restaurant unit. Modeled after Chicago’s Water Tower landmark, the restaurant consisted of a metal frame with siding, battlements, and turrets made of white porcelain. White Castle incorporated another subsidiary, the Porcelain Steel Building Company to manufacture Ray’s unique White Castle buildings and also most of the company’s kitchen equipment. Porcelain Steel constructed 55 of these restaurants, although only two ultimately had to be moved.

In 1934, Ingram bought out his partner’s interest in the operation and moved to Columbus, Ohio, purchasing a ten–acre track of land on which the company set up corporate headquarters and its Porcelain Steel manufacturing operations. Despite the severe economic effects of the Great Depression, White Castle’s business grew steadily during the 1930s, from 59 million burgers sold during its first decade of operation to 294 million by the end of its second.

World War II, however, had a somewhat negative impact on White Castle’s growth. Due to shortages of beef caused by rationing, the number of restaurant units shrunk from 100 to 70. White Castle’s subsidiaries stopped making restaurant equipment and devoted their efforts to supporting the war. At the close of the war, when the restaurant business remained in a slump, Porcelain Steel began supplying fertilizer spreaders to the O.M. Scoot & Sons Company.

In 1949, a White Castle employee made the discovery that broken hamburger patties cooked faster. This led to the development of White Castle’s signature five–holed hamburger, a process that allowed the burger to cook more quickly and eliminated the time–consuming task of flipping the burger. The economy resumed its growth in the 1950s, and White Castle expanded into high–traffic urban areas in the Northeast, such as Detroit, Minneapolis/St. Paul, Cleveland, and New York City. During that time, the company began the practice of selling frozen burger patties to customers who wanted to cook them at home. In 1957, the company hired Simpson Marketing of Chicago to handle advertising, and the number of hamburgers sold reached 846 million.

By 1963, White Castle was operating 100 restaurants in 11 metropolitan areas and owned 34 prime properties and two manufacturing subsidiaries. Growth continued steadily throughout the 1960s with little change in menu—with the exception of its 1965 decision to use all–vegetable oil for french fries, onion rings, and other fried foods (another industry first). When founder Billy Ingram died in 1966, his son E.W. (Edgar) Ingram, Jr., subsequently assumed the post of president.

White Castle’s expansion remained conservative and modest, supported by internal funding and very few loans. Growth of the fast food industry exploded in the 1970s and 1980s, led by the expansion of McDonald’s, Burger King, and Wendy’s restaurant chains. From 1970 to the late 1980s, however, White Castle grew slowly but steadily, collecting stories about customers who “would do anything to get their hands on [White Castle] hamburgers.” These included tales of a man who rented a silver Rolls Royce to take his wife to dine at White Castle in honor of their fiftieth wedding anniversary, as well as the story of a family who moved to a western state and missed White Castle hamburgers so much they had another family member drop bags of burgers down by parachute as he flew his plane over their farm. In 1977, E.W. (Bill) Ingram III took over as president of the company, the third generation of Ingrams to hold that post. Two years later, in response to changes in the fast food industry, the company opened its first drive–through establishment, in Indianapolis. The number of White Castle hamburgers sold topped 2.3 billion.

From 1977 to 1987, the number of restaurants grew by over 100, and White Castle entered the second most productive period of its history. In 1981, the company instituted its innovative “Hamburgers to Fly” program, a service that provided a toll–free number through which people could order frozen White Castle burgers and have them delivered anywhere in the United States within 24 hours. The service, according to company officials, was “an overnight success.” During the 1980s, frozen White Castle hamburgers virtually created their own supermarket niche as private entrepreneurs purchased frozen burgers from restaurants and resold them to grocery stores at a profit. In 1987, White Castle decided to get in on its own game. The company discontinued its “Hamburgers to Fly,” program, incorporated White Castle Distributing, Inc., and began an intensive campaign to market its frozen burgers at supermarkets across the United States. Sales grew by an average of 15 to 20 percent annually. By 1990, White Castle frozen hamburgers had captured the number three position in the frozen sandwich category with annual sales of $27.2 million.

1986 gross sales exceeded $268.5 million, with per unit sales averaging $1.3 million, near the best in the industry. In 1987, White Castle ended its 30–year relationship with Simpson Marketing of Chicago and hired Gunder & Associates, a Columbus agency, to handle its $5 million advertising account. Soon thereafter, the company instituted several new marketing strategies, including breakfast meals, children’s meals, and a chicken sandwich.

While new store openings in the United States continued at a rate of 25 units a year, the company also expanded overseas in the 1980s, granting its first franchise rights to a Japanese firm in 1986. Soon, four White Castle units were operating in Kyoto, and other franchises were established in Thailand, Malaysia, Indonesia, and Singapore. By 1989, White Castle had 243 restaurants in operation, with an average volume per store second only to McDonald’s.

In 1991, White Castle celebrated its seventieth anniversary with the slogan, “After 70 years, it’s like nothing else. Nothing.” The company took out a full–page color advertisement in USA Today, detailing the history of White Castles and previewing its coupons for 70 cent value meals. Sales that year hit $305 million; in 1993, gross sales topped $307 million. As it neared its seventy–fifth anniversary, White Castle Systems continued to grow in much the same manner it had throughout its history: conservatively, thoughtfully, and with a good dose of Billy Ingram’s homespun wisdom.

White Castle System, Inc.

views updated May 23 2018

White Castle System, Inc.

555 West Goodale Street
Columbus, Ohio 43215-1171
U.S.A.
Telephone: (614) 228-5781
Toll Free: (800) 843-2728
Fax: (614) 464-0596
Web site: http://www.whitecastle.com

Private Company
Incorporated: 1924 as White Castle System of Eating Houses Corporation
Employees: 12,000
Sales: $438 million (1999 est.)
NAIC: 722211 Limited-Service Restaurants

Considered the first fast-food hamburger chain and known for its unique steam-grilled patties, White Castle System, Inc. has long since been surpassed by the burger giants—McDonald’s Corporation, Burger King Corporation, and Wendy’s International, Inc. White Castle operates 345 restaurants located primarily in urban areas in the Midwestern and eastern United States. Unlike most hamburger chains, White Castle’s restaurants, with the exception of a small number located outside the United States, are not franchised; all U.S. units are owned and operated by White Castle System, of which the E.W. Ingram family has been sole proprietor since 1933. In the early 21st century, E.W. Ingram III—grandson of founder E.W. Ingram—directed the company as chairperson, president, and CEO, while his father, E.W. In-gram, Jr., held the position of chairman emeritus.

White Castle System also owns and operates three bakeries, two meat processing plants, and two frozen sandwich plants. Its subsidiary, PSB Company, manufactures White Castle restaurant equipment. Another subsidiary, White Castle Distributing, Inc., markets and distributes frozen White Castle hamburgers to supermarkets nationwide. The company prides itself on its generous employee benefit plans and a turnover rate that is unusually low for the fast-food industry.

Although primarily known for its square hamburgers, White Castle also offers cheeseburgers, chicken sandwiches, french fries, onion rings, breakfast meals, and dessert pastries. Through a cobranding deal with AFC Enterprises, Inc., several dozen White Castle units also sell menu items from the Churchs Chicken chain. In their 75-plus years of existence, White Castle hamburgers have developed an image that sets them apart from other fast-food burgers. The pop music group The Beastie Boys sang an ode to the sandwiches in the 1980s, and the Canadian pop group The Smithereens wrote “White Castle Blues” several years later. According to a Columbus Monthly story on the 70th anniversary of the company, “Public opinion about the hamburgers [which sell at a rate of 480 million a year] seems to fall into three categories: Those who swear by the things, those who detest them, and those who haven’t tried them out of fear or lack of opportunity and are waiting to be included in the first two categories.”

White Castle hamburgers have such nicknames as Sliders, Gut Bombs, Castles, Whitey-One-Bites, and Belly Busters, and in recent years, the company’s marketing team has capitalized on this image. Company publicity refers to the hamburgers as “Sliders” and has even stated that “the full impact of eating White Castle hamburgers normally isn’t felt until the day after.” The company also sponsors contests for recipes incorporating White Castle hamburgers and sells clothing emblazoned with the White Castle logo or its “Slider” nickname.

Fast-food Pioneer in the 1920s

The distinctive taste of White Castle hamburgers is attributed to one of the restaurant’s cofounders, Walter Anderson. Anderson worked in a Wichita, Kansas restaurant and had perfected a unique way of cooking hamburger patties, adding shredded onions and placing both halves of the bun over the sizzling meat. In 1916, he rented a remodeled streetcar, bought a griddle plate and refrigerator, and opened his own hamburger stand. Using the slogan “buy ‘em by the sack,” Anderson sold a good number of hamburgers.

By 1921, he had three hamburger stands in operation and was looking to finance the opening of a fourth. That year, he met E.W. “Billy” Ingram, a real estate and insurance broker. With a $700 loan, the two founded the first White Castle restaurant, an 11- by 16-foot cement block structure that resembled a small castle, complete with turrets and battlements.

At that time, hamburgers were a relatively novel food item, sold at fairs, amusement parks, carnivals, and some restaurants. Very few hamburger stands were in operation, and the ones that were had reputations as unclean purveyors of products that were less than 100 percent pure beef. According to a speech by Ingram at a 1964 Newcomen Society meeting in Columbus, Ohio, his and Anderson’s goal was to “break down a deep-rooted prejudice against the hamburger by constantly improving its quality and serving it in clean and sanitary surroundings.” He added that the two chose the name White Castle, because “‘White’ signifies purity and cleanliness and ‘Castle’ represents strength, permanence and stability.”

The two established a motto: “Serve the finest products, for the least cost, in the cleanest surroundings, with the most courteous personnel.” The two also had another motto: “He who owes no money will never go broke.” Within 90 days of opening its first restaurant, the firm of Anderson and Ingram repaid its debt. Profits were fueled back into the organization, and more restaurants were opened. In 1924, Anderson and In-gram incorporated their company as White Castle System of Eating Houses Corporation. Competing hamburger stands inspired by the success of White Castle popped up all over Wichita, run by theater operators, real estate brokers, and even Ingram’s own dentist.

Between 1923 and 1931, White Castle System established 100 restaurants in cities across the Midwest. In his speech to the Newcomen Society, Ingram claimed that in each city where they opened a restaurant, “We searched carefully but did not find any places specializing in the sales of hamburger sandwiches.” He went on to add that White Castle created its own competition.

In its early years, White Castle also focused on the quality of its coffee. “We try to serve the best coffee in town” signs were hung in each restaurant, earnestly stating a company goal during the first 30 years of business. Indeed, White Castle took this statement seriously, setting uniform standards throughout its restaurant system. Adherence was maintained using a hydrometer created especially for White Castle coffee.

In keeping with trends in the burgeoning foodservice industry, White Castle was also concerned about the nutritional value of its hamburgers. The company hired the head of the physiological chemistry department at a Big 10 university to spend a summer studying the food value of its burgers. The chemist hired a student as test subject, asking him to eat nothing but White Castle hamburgers for the entire summer. At the end of the period, the student was found to be in good health, despite the fact that he was “eating 20 to 24 hamburgers a day during the last few weeks.” The professor recommended that calcium be added to the flour used in the buns and suggested a specific weight ratio of meat to bun to provide a more nutritious balance of proteins, carbohydrates, and fat. White Castle complied, and altered its recipe only slightly since that time.

1930s and 1940s: Fast-food Innovator

In 1931 White Castle became the first fast-food restaurant to advertise in a newspaper. Ingram and Anderson chose to concentrate on generating new carryout business, as counter space inside the restaurant was limited to less than 20 seats. Using Anderson’s “buy ‘em by the sack” slogan, White Castle ran a quarter-page ad in two St. Louis evening newspapers. Included in the advertisement was a coupon offering five hamburgers for a dime between two p.m. and midnight on the following Saturday. The advertisement was a success. By two p.m. that Saturday, most White Castles had lines forming outside their takeout windows. Within an hour, some operations had run out of buns. Supply houses had to work overtime to produce buns and burgers to meet the demand. Buoyed by the achievements of their original advertisement, Ingram and Anderson continued the practice, making coupons valid for 24-hour periods, to prevent the flood of customers they experienced the first time.

The year 1931 was one of innovations for the company. Although there was no doubt that Anderson’s “buy ‘em by the sack” slogan was successful, a problem arose in that the burgers at the bottom of a sack full of hamburgers would often be crushed by the time a customer arrived at his destination. To prevent this from happening, White Castle developed cardboard cartons with heat-resistant linings—the first paper cartons used in the food industry. The company then expanded this concept to include cardboard containers for hot and cold drinks, french fries, and pie.

Other innovations introduced during this time included improving the quality and safety of beef through the use of frozen hamburger patties (another 1931 initiative), as well as a patented coffee mug design and exhaust systems and specially designed griddles in the restaurants. In 1932 White Castle incorporated its first subsidiary, the Paperlynen Company, to manufacture paper hats worn by White Castle employees. Company engineers had developed a machine that manufactured paper hats so quickly that one machine could make enough hats in two weeks to supply the entire White Castle chain for a year. Realizing they had a potentially profitable business on their hands, the company began marketing the paper caps to other foodservice establishments. By 1964, Paperlynen was selling more than 54 million caps worldwide a year.

Company Perspectives

White Castle Pledge: “Serving the finest products, for the least cost, in the cleanest surroundings, with the most courteous personnel”

As part of its marketing drive in the early 1930s, White Castle also began a campaign “to upgrade the image of the hamburger” in the minds of housewives. In each city where White Castles were located, the company hired hostesses who went by the name of “Julia Joyce.” Julia Joyce would guide housewives on tours of their local White Castle, allowing them to examine the cleanliness of White Castle kitchens and the sanitary manner in which hamburgers were cooked. After the housewives finished their tour, the hostess presented each with a coupon offering five carryout hamburgers for ten cents redeemable immediately, as well as a coupon for children, valid the following Saturday. Julia Joyce also set up meetings with local women’s clubs where she served hamburgers, coffee, soft drinks, and pie in carryout containers and then went on to explain how White Castle’s carry out service could be used for families or club outings.

Perhaps one of White Castle’s most unusual innovations was the design and construction of semipermanent restaurants that could be easily transported from one location to another. Be-cause White Castles were relatively small (15 feet by 11 feet), many landlords refused to lease such a scant parcel of land for more than 30 days. Ingram came up with the idea of developing a building that could be moved, thus preventing the loss of a building when landlords refused to renew the restaurant’s lease. In 1928 Ingram hired L.W. Ray to patent a movable restaurant unit. Modeled after Chicago’s Water Tower landmark, the restaurant consisted of a metal frame with siding, battlements, and turrets made of white porcelain. In 1934 White Castle incorporated another subsidiary, the Porcelain Steel Building Company, to manufacture Ray’s unique White Castle buildings as well as most of the company’s kitchen equipment. Porcelain Steel constructed 55 of these restaurants, although only two ultimately had to be moved.

Ingram bought out his partner’s interest in the operation in 1933 and the following year moved to Columbus, Ohio, pur-chasing a ten-acre tract of land on which the company set up corporate headquarters and its Porcelain Steel manufacturing operations. Despite the severe economic effects of the Great Depression, White Castle’s business grew steadily during the 1930s, from 59 million burgers sold during its first decade of operation to 294 million by the end of its second.

World War II, however, had a somewhat negative impact on White Castle’s growth. Due to shortages of beef caused by rationing, the number of restaurant units shrunk from 100 to 70. White Castle’s subsidiaries stopped making restaurant equipment and devoted their efforts to supporting the war. At the close of the war, when the restaurant business remained in a slump, Porcelain Steel began supplying fertilizer spreaders to O.M. Scott & Sons Company.

1950s Through 1980s: Steady, Modest Growth

In 1949, a White Castle employee made the discovery that broken hamburger patties cooked faster. This led to the development of White Castle’s signature five-holed hamburger, a process that allowed the burger to cook more quickly and eliminated the time-consuming task of flipping the burger. The economy resumed its growth in the 1950s, and White Castle expanded into high-traffic urban areas in the Midwest and Northeast, such as Detroit, Minneapolis/St. Paul, Cleveland, and New York City. During that time, the company began the practice of selling frozen burger patties to customers who wanted to cook them at home. In 1957 the company hired Simpson Marketing of Chicago to handle advertising, and the number of hamburgers sold reached 846 million.

By 1963, White Castle was operating 100 restaurants in 11 metropolitan areas and owned 34 prime properties and two manufacturing subsidiaries. Growth continued steadily throughout the 1960s with little change in menu—with the exception of its 1965 decision to use all-vegetable oil for french fries, onion rings, and other fried foods (another industry first). When founder Billy Ingram died in 1966, his son E.W. (Edgar) Ingram, Jr., subsequently assumed the post of president.

White Castle’s expansion remained conservative and modest, supported by internal funding and very few loans. Growth of the fast-food industry exploded in the 1970s and 1980s, led by the expansion of the McDonald’s, Burger King, and Wendy’s restaurant chains. From 1970 to the late 1980s, however, White Castle grew slowly but steadily, collecting stories about customers who “would do anything to get their hands on [White Castle] hamburgers.” These included tales of a man who rented a silver Rolls Royce to take his wife to dine at White Castle in honor of their 50th wedding anniversary, as well as the story of a family who moved to a western state and missed White Castle hamburgers so much they had another family member drop bags of burgers down by parachute as he flew his plane over their farm.

Key Dates

1916:: Walter Anderson opens a hamburger stand in Wichita, Kansas.
1921:: Anderson and E.W. Ingram open the first White Castle restaurant, also in Wichita.
1924:: Anderson and Ingram incorporate their firm as White Castle System of Eating Houses Corporation.
1931:: Company innovations include newspaper ads, coupons, paper cartons for the burgers, and the use of frozen hamburger patties.
1932:: Paperlynen Company is formed to make paper hats worn by White Castle workers.
1933:: Anderson sells his interest in the company to Ingram.
1934:: The company is relocated to Columbus, Ohio; Porcelain Steel Building Company is established as a manufacturing subsidiary.
1949:: The use of a five-holed hamburger patty begins, speeding the cooking time and eliminating flipping.
1965:: Chain begins using all-vegetable oil for fried foods.
1966:: The founding Ingram dies; his son E.W. Ingram, Jr., takes over as president.
1977:: E.W. Ingram III is named president of the company.
1979:: The first drive-through unit is opened in Indianapolis.
1981:: The “Hamburgers to Fly” home delivery program is launched.
1986:: First overseas foray, with the granting of franchise rights to a Japanese firm.
1987:: “Hamburgers to Fly” is replaced by the marketing of frozen burgers in supermarkets through a newly established subsidiary, White Castle Distributing, Inc.
1996:: Through a franchising deal, expansion into Mexico begins; Churchs Chicken items are added to the menu of selected units through a cobranding arrangement.

In 1977 E.W. (Bill) Ingram III took over as president of the company, the third generation of Ingrams to hold that post. Two years later, in response to changes in the fast-food industry, the company opened its first drive-through establishment, in Indianapolis. The number of White Castle hamburgers sold topped 2.3 billion.

From 1977 to 1987, the number of restaurants grew by more than 100, and White Castle entered the second most productive period of its history. In 1981 the company instituted its innovative “Hamburgers to Fly” program, a service that provided a toll free number through which people could order frozen White Castle burgers and have them delivered anywhere in the United States within 24 hours. The service, according to company officials, was “an overnight success.” During the 1980s, frozen White Castle hamburgers virtually created their own supermarket niche as private entrepreneurs purchased frozen burgers from restaurants and resold them to grocery stores at a profit. In 1987, White Castle decided to get in on its own game. The company discontinued its “Hamburgers to Fly” program, incorporated White Castle Distributing, Inc., and began an intensive campaign to market its frozen burgers at supermarkets across the United States. Sales grew by an average of 15 to 20 percent annually. By 1990, White Castle frozen hamburgers had captured the number three position in the frozen sandwich category, with annual sales of $27.2 million.

Gross sales exceeded $268.5 million in 1986, with per unit sales averaging $1.3 million, near the best in the industry. In 1987 White Castle ended its 30-year relationship with Simpson Marketing of Chicago and hired Gunder & Associates, a Columbus agency, to handle its $5 million advertising account. Shortly thereafter, the company instituted several new marketing strategies, including breakfast meals, children’s meals, and a chicken sandwich.

While new store openings in the United States continued at a rate of 25 units a year, the company also expanded overseas in the 1980s, granting its first franchise rights to a Japanese firm in 1986. Soon, four White Castle units were operating in Kyoto, and other franchises were established in Thailand, Malaysia, Indonesia, and Singapore. By 1989, White Castle had 243 restaurants in operation, with an average volume per store second only to McDonald’s.

1990s and Beyond

In 1991 White Castle celebrated its 70th anniversary with the slogan, “After 70 years, it’s like nothing else. Nothing.” The company took out a full-page color advertisement in USA Today, detailing the history of White Castles and previewing its coupons for 70 cent value meals. Sales that year hit $305 million. In 1993 the company launched a new advertising campaign featuring the theme “White Castle, What You Crave”; it was created by the firm’s new ad agency, the Detroit unit of J. Walter Thompson. The following year, E.W. Ingram III added the chairmanship to his title of president and CEO, with E.W. Ingram, Jr., being named chairman emeritus.

By the mid-1990s, the company was selling 500 million burgers per year, and the number of U.S. units had reached 300. In 1995 White Castle Distributing began marketing frozen hamburgers and cheeseburgers through convenience stores and vending machines. White Castle’s franchise-led expansion into the Pacific Rim had proved less than successful, but the company launched another attempt at overseas growth in 1996 with its first unit in Mexico City. This, too, was a franchised operation. Also in 1996 White Castle entered into a cobranding arrangement with Churchs Chicken, a unit of AFC Enterprises, Inc. and a fast-food chain similar to White Castle in its simple menu, value pricing, and demographics. Through the deal, selected White Castle units began adding Churchs Chicken food items to their menus. White Castle had been looking for ways to expand its menu, and this arrangement provided an efficient method for doing so. By early 1999, more than 87 units were selling Churchs Chicken products. The menu in selected markets also was expanded through the addition of Early Start Omelet sandwiches and jalapeno cheeseburgers in 1997.

By 1999 gross restaurant sales had reached $438 million. Plans for the early 21st century included the opening of 20 to 25 new stores each year. After nearly 80 years in business, White Castle System continued to grow in much the same manner it had throughout its history: conservatively, thoughtfully, and with a good dose of Billy Ingram’s homespun wisdom.

Principal Subsidiaries

PSB Company; White Castle Distributing, Inc.

Principal Competitors

Burger King Corporation; Checkers Drive-In Restaurants, Inc.; CKE Restaurants, Inc.; McDonald’s Corporation; Sonic Corp.; TRICON Global Restaurants, Inc.; Wendy’s International, Inc.; Whataburger, Inc.

White Castle Management Company

views updated May 14 2018

White Castle Management Company

555 West Goodale Street
Columbus, Ohio 43215-1104
U.S.A.
Telephone: (614) 228-5781
Toll Free: (800) 843-2728
Fax: (614) 464-0596
Web site: http://www.whitecastle.com

Private Company
Founded: 1921
Incorporated: 1924 as White Castle System of Eating Houses Corporation
Employees: 12,000
Sales: $606 million (2005 est.)
NAIC: 722211 Limited-Service Restaurants

Considered the first fast-food hamburger chain and known for its unique steam-grilled patties, White Castle Management Company has long since been surpassed by the burger giants—McDonald's Corporation, Burger King Holdings, Inc., and Wendy's International, Inc. White Castle operates more than 400 restaurants located primarily in urban areas in the midwestern and eastern United States. Unlike most hamburger chains, White Castle's restaurants, with the exception of a small number located outside the United States, are not franchised; all U.S. units are owned and operated by White Castle Management, of which the E. W. Ingram family has been sole proprietor since 1933. In the early 21st century, E. W. Ingram III (grandson of founder E. W. Ingram) directed the company as chairperson, president, and CEO.

White Castle Management also owns and operates three bakeries, three meat processing plants, and two frozen sandwich plants. Its PSB Company subsidiary manufactures White Castle restaurant equipment, as well as PrizeLAWN brand lawn fertilizer spreaders and electrostatic powder paints. The WCD (White Castle Distributing) division markets and distributes frozen White Castle hamburgers to food retailers in 35 states, from Florida to California. The company prides itself on its generous employee benefit plans and a turnover rate that is unusually low for the fast-food industry.

Although primarily known for its square hamburgers (which sell at a rate of more than 500 million a year), White Castle also offers cheeseburgers, chicken and fish sandwiches, french fries, onion rings, cheese sticks, and other items that vary from outlet to outlet. In their 85-plus years of existence, White Castle hamburgers have developed an image that sets them apart from other fast-food burgers. The pop music group The Beastie Boys sang an ode to the sandwiches in the 1980s, and the Canadian pop group The Smithereens wrote "White Castle Blues" several years later. In 2004 the hamburger chain went Hollywood through its starring role in the road-trip film Harold & Kumar Go to White Castle.

White Castle hamburgers have such nicknames as Sliders, Gut Bombs, Castles, Whitey-One-Bites, and Belly Busters, and in the late 20th century the company's marketing team began capitalizing on this image. Company publicity refers to the hamburgers as "Slyders" (a company-trademarked name) and has even stated that "the full impact of eating White Castle hamburgers normally isn't felt until the day after." The company also sponsors contests for recipes incorporating White Castle hamburgers and sells clothing emblazoned with the White Castle logo. Building on the "what you crave" tag line used in its advertising, the company has also launched the Craver's Hall of Fame, honoring those "cravers" with the best stories of their dedication to White Castle.

FAST-FOOD PIONEER

The distinctive taste of White Castle hamburgers is attributed to one of the restaurant's cofounders, Walter Anderson. Anderson worked in a Wichita, Kansas, restaurant and had perfected a unique way of cooking hamburger patties, adding shredded onions and placing both halves of the bun over the sizzling meat. In 1916 he rented a remodeled streetcar, bought a griddle plate and refrigerator, and opened his own hamburger stand. Using the slogan "buy 'em by the sack," Anderson sold a good number of hamburgers, at a nickel apiece.

By 1921, he had four hamburger stands in operation and was looking to finance the opening of a fifth. That year, he met E. W. "Billy" Ingram, a real estate and insurance broker. With a $700 loan, the two founded the first White Castle restaurant, an 11- by 16-foot cement block structure that resembled a small castle, complete with turrets and battlements.

At that time, hamburgers were a relatively novel food item, sold at fairs, amusement parks, carnivals, and some restaurants. Very few hamburger stands were in operation, and the ones that were had reputations as unclean purveyors of products that were less than 100 percent pure beef. According to a speech by Ingram at a 1964 Newcomen Society meeting in Columbus, Ohio, his and Anderson's goal was to "break down a deep-rooted prejudice against the hamburger by constantly improving its quality and serving it in clean and sanitary surroundings." He added that the two chose the name White Castle, because "'White' signifies purity and cleanliness and 'Castle' represents strength, permanence and stability."

The two established a motto: "Serve the finest products, for the least cost, in the cleanest surroundings, with the most courteous personnel." The two also had another motto: "He who owes no money will never go broke." Within 90 days of opening its first restaurant, the firm of Anderson and Ingram repaid its debt. Profits were fueled back into the organization, and more restaurants were opened. In 1924 Anderson and Ingram incorporated their company as White Castle System of Eating Houses Corporation. Competing hamburger stands inspired by the success of White Castle popped up all over Wichita, run by theater operators, real estate brokers, and even Ingram's own dentist.

Between 1923 and 1931, White Castle System established 100 restaurants in cities across the Midwest. In his speech to the Newcomen Society, Ingram claimed that in each city where they opened a restaurant, "We searched carefully but did not find any places specializing in the sales of hamburger sandwiches." He went on to add that White Castle created its own competition.

In its early years, White Castle also focused on the quality of its coffee. "We try to serve the best coffee in town" signs were hung in each restaurant, earnestly stating a company goal during the first 30 years of business. Indeed, White Castle took this statement seriously, setting uniform standards throughout its restaurant system. Adherence was maintained using a hydrometer created especially for White Castle coffee.

COMPANY PERSPECTIVES

Our Values: We are a family-owned business passionate about growth…. Growth for our extended family of all White Castle and PSB team members. Growth grounded in caring and remaining a family-owned business for generations to come. Growth for the business and return on investment that equals or exceeds the growth rate achieved by preceding generations. Growth in profit-sharing contributions and shareholder value reflecting stewardship and consistency. Growth forged from unquestionable ethics, integrity and trust. Growth for our role in the community—demonstrating inspirational leadership and making a difference in people's lives.

In keeping with trends in the burgeoning foodser-vice industry, White Castle was also concerned about the nutritional value of its hamburgers. In 1930 the company hired the head of the physiological chemistry department at a Big Ten university to spend a summer studying the food value of its burgers. The chemist hired a student as test subject, asking him to eat nothing but White Castle hamburgers for the entire summer. At the end of the period, the student was found to be in good health, despite the fact that he was "eating 20 to 24 hamburgers a day during the last few weeks." The professor recommended that calcium be added to the flour used in the buns and suggested a specific weight ratio of meat to bun to provide a more nutritious balance of proteins, carbohydrates, and fat. White Castle complied, and altered its recipe only slightly since that time.

FAST FOOD INNOVATOR

In 1931 White Castle became the first fast-food restaurant to advertise in a newspaper. Ingram and Anderson chose to concentrate on generating new carry-out business, as counter space inside the restaurant was limited to less than 20 seats. Using Anderson's "buy 'em by the sack" slogan, White Castle ran a quarter-page ad in two St. Louis evening newspapers. Included in the advertisement was a coupon offering five hamburgers for a dime between 2 p.m. and midnight on the following Saturday. The advertisement was a success. By 2 p.m. that Saturday, most White Castles had lines forming outside their takeout windows. Within an hour, some operations had run out of buns. Supply houses had to work overtime to produce buns and burgers to meet the demand. Buoyed by the achievements of their original advertisement, Ingram and Anderson continued the practice, making coupons valid for 24-hour periods, to prevent the flood of customers they experienced the first time.

The year 1931 was one of innovations for the company. Although there was no doubt that Anderson's "buy 'em by the sack" slogan was successful, a problem arose in that the burgers at the bottom of a sack full of hamburgers would often be crushed by the time a customer arrived at his destination. To prevent this from happening, White Castle developed cardboard cartons with heat-resistant linings—the first paper cartons used in the food industry. The company then expanded this concept to include cardboard containers for hot and cold drinks, french fries, and pie.

Other innovations introduced during this time included improving the quality and safety of beef through the use of frozen hamburger patties (another 1931 initiative), as well as a patented coffee mug design and exhaust systems and specially designed griddles in the restaurants. In 1932 White Castle incorporated its first subsidiary, the Paperlynen Company, to manufacture paper hats worn by White Castle employees. Company engineers had developed a machine that manufactured paper hats so quickly that one machine could make enough hats in two weeks to supply the entire White Castle chain for a year. Realizing they had a potentially profitable business on their hands, the company began marketing the paper caps to other foodservice establishments. By 1964, Paperlynen was selling more than 54 million caps worldwide a year.

KEY DATES

1916:: Walter Anderson opens a hamburger stand in Wichita, Kansas.
1921:: Anderson and E. W. Ingram open the first White Castle restaurant, also in Wichita.
1924:: Anderson and Ingram incorporate their firm as White Castle System of Eating Houses Corporation.
1931:: Company innovations include newspaper ads, coupons, paper cartons for the burgers, and the use of frozen hamburger patties.
1932:: Paperlynen Company is formed to make paper hats worn by White Castle workers.
1933:: Anderson sells his interest in the company to Ingram.
1934:: The company is relocated to Columbus, Ohio; Porcelain Steel Building Company is established as a manufacturing subsidiary.
1949:: The use of a five-holed hamburger patty begins, speeding the cooking time and eliminating flipping.
1965:: Chain begins using all-vegetable oil for fried foods.
1966:: The founding Ingram dies; his son E. W. Ingram, Jr., takes over as president.
1977:: E. W. Ingram III is named president of the company.
1979:: The first drive-through unit is opened in Indianapolis.
1981:: The "Hamburgers to Fly" home delivery program is launched.
1986:: Company pursues first overseas foray, with the granting of franchise rights to a Japanese firm.
1987:: "Hamburgers to Fly" is replaced by the marketing of frozen burgers in supermarkets through a newly established subsidiary, White Castle Distributing, Inc.
1996:: Churchs Chicken items are added to the menu of selected units through a cobranding arrangement.
2001:: The Crave Case makes its successful debut.
2006:: The 400th White Castle opens for business.

As part of its marketing drive in the early 1930s, White Castle also began a campaign "to upgrade the image of the hamburger" in the minds of housewives. In each city where White Castles were located, the company hired hostesses who went by the name of "Julia Joyce." Julia Joyce would guide housewives on tours of their local White Castle, allowing them to examine the cleanliness of White Castle kitchens and the sanitary manner in which hamburgers were cooked. After the housewives finished their tour, the hostess presented each with a coupon offering five carryout hamburgers for ten cents redeemable immediately, as well as a coupon for children, valid the following Saturday. Julia Joyce also set up meetings with local women's clubs where she served hamburgers, coffee, soft drinks, and pie in carryout containers and then went on to explain how White Castle's carryout service could be used for families or club outings.

Perhaps one of White Castle's most unusual innovations was the design and construction of semipermanent restaurants that could be easily transported from one location to another. Because White Castles were relatively small (15 feet by 11 feet), many landlords refused to lease such a scant parcel of land for more than 30 days. Ingram came up with the idea of developing a building that could be moved, thus preventing the loss of a building when landlords refused to renew the restaurant's lease. In 1928 Ingram hired L. W. Ray to patent a movable restaurant unit. Modeled after Chicago's Water Tower landmark, the restaurant consisted of a metal frame with siding, battlements, and turrets made of white porcelain. In 1934 White Castle incorporated another subsidiary, the Porcelain Steel Building Company, to manufacture Ray's unique White Castle buildings as well as most of the company's kitchen equipment. Porcelain Steel constructed 55 of these restaurants, although only two ultimately had to be moved.

Ingram bought out his partner's interest in the operation in 1933 and the following year moved to Columbus, Ohio, purchasing a ten-acre tract of land on which the company set up corporate headquarters and its Porcelain Steel manufacturing operations. Despite the severe economic effects of the Great Depression, White Castle's business grew steadily during the 1930s, from 59 million burgers sold during its first decade of operation to 294 million by the end of its second.

World War II, however, had a somewhat negative impact on White Castle's growth. Because of shortages of beef caused by rationing, the number of restaurant units shrunk from 100 to 70. White Castle's subsidiaries stopped making restaurant equipment and devoted their efforts to supporting the war. At the close of the war, when the restaurant business remained in a slump, Porcelain Steel began supplying fertilizer spreaders to O.M. Scott & Sons Company. Also right after the war, beef prices skyrocketed when President Harry S. Truman lifted price controls on beef, forcing White Castle to double the price of its hamburgers, to ten cents.

STEADY, MODEST GROWTH

In 1949 a White Castle employee made the discovery that broken hamburger patties cooked faster. This led to the development of White Castle's signature five-holed hamburger, a process that allowed the burger to cook more quickly and eliminated the time-consuming task of flipping the burger. The economy resumed its growth in the 1950s, and White Castle expanded into high-traffic urban areas in the Midwest and Northeast, such as Detroit, Minneapolis/St. Paul, Cleveland, and New York City. During that time, the company began the practice of selling frozen burger patties to customers who wanted to cook them at home. In 1957 the company hired Simpson Marketing of Chicago to handle advertising, and the number of hamburgers sold reached 846 million.

By 1963, White Castle was operating 100 restaurants in 11 metropolitan areas and owned 34 prime properties and two manufacturing subsidiaries. Growth continued steadily throughout the 1960s with little change in menu, with the exception of its 1965 decision to use all-vegetable oil for french fries, onion rings, and other fried foods (another industry first). When founder Billy Ingram died in 1966, his son E. W. (Edgar) Ingram, Jr., subsequently assumed the post of president.

White Castle's expansion remained conservative and modest, supported by internal funding and very few loans. Growth of the fast-food industry exploded in the 1970s and 1980s, led by the expansion of the McDonald's, Burger King, and Wendy's restaurant chains. From 1970 to the late 1980s, however, White Castle grew slowly but steadily, collecting stories about customers who "would do anything to get their hands on [White Castle] hamburgers." These included tales of a man who rented a silver Rolls Royce to take his wife to dine at White Castle in honor of their 50th wedding anniversary, as well as the story of a family who moved to a western state and missed White Castle hamburgers so much they had another family member drop bags of burgers down by parachute as he flew his plane over their farm.

In 1977 E. W. (Bill) Ingram III took over as president of the company, the third generation of Ingrams to hold that post. Two years later, in response to changes in the fast-food industry, the company opened its first drive-through establishment, in Indianapolis. The number of White Castle hamburgers sold topped 2.3 billion.

From 1977 to 1987, the number of restaurants grew by more than 100, and White Castle entered the second most productive period of its history. In 1981 the company instituted its innovative "Hamburgers to Fly" program, a service that provided a toll-free number through which people could order frozen White Castle burgers and have them delivered anywhere in the United States within 24 hours. The service, according to company officials, was "an overnight success." During the 1980s, frozen White Castle hamburgers virtually created their own supermarket niche as private entrepreneurs purchased frozen burgers from restaurants and resold them to grocery stores at a profit. In 1987 White Castle decided to get in on its own game. The company discontinued its "Hamburgers to Fly" program, incorporated White Castle Distributing, Inc., and began an intensive campaign to market its frozen burgers at supermarkets across the United States. Sales grew by an average of 15 to 20 percent annually. By 1990, White Castle frozen hamburgers had captured the number three position in the frozen sandwich category, with annual sales of $27.2 million.

Gross sales exceeded $268.5 million in 1986, with per unit sales averaging $1.3 million, near the best in the industry. In 1987 White Castle ended its 30-year relationship with Simpson Marketing of Chicago and hired Gunder & Associates, a Columbus agency, to handle its $5 million advertising account. Shortly thereafter, the company instituted several new marketing strategies, including breakfast meals, children's meals, and a chicken sandwich.

While new store openings in the United States continued at a rate of 25 units a year, the company also expanded overseas in the 1980s, granting its first franchise rights to a Japanese firm in 1986. Soon, four White Castle units were operating in Kyoto, and other franchises were established in Thailand, Malaysia, Indonesia, and Singapore. By 1989, White Castle had 243 restaurants in operation, with an average volume per store second only to McDonald's.

"WHAT YOU CRAVE"

In 1991 White Castle celebrated its 70th anniversary with the slogan, "After 70 years, it's like nothing else. Nothing." The company took out a full-page color advertisement in USA Today, detailing the history of White Castles and previewing its coupons for 70-cent value meals. Sales that year hit $305 million. In 1993 the company launched a new advertising campaign featuring the theme "White Castle, What You Crave"; it was created by the firm's new ad agency, the Detroit unit of J. Walter Thompson. The following year, E. W. Ingram III added the chairmanship to his title of president and CEO, with E. W. Ingram, Jr., being named chairman emeritus.

By the mid-1990s, the company was selling 500 million burgers per year, and the number of U.S. units had reached 300. In 1995 White Castle Distributing began marketing frozen hamburgers and cheeseburgers through convenience stores and vending machines. White Castle's franchise-led expansion into the Pacific Rim had proved less than successful, but the company launched another attempt at overseas growth in 1996 with its first unit in Mexico City. This, too, was a franchised operation.

Also in 1996 White Castle entered into a cobranding arrangement with Churchs Chicken, a unit of AFC Enterprises, Inc., and a fast-food chain similar to White Castle in its simple menu, value pricing, and demographics. Through the deal, selected White Castle units began adding Churchs Chicken food items to their menus. White Castle had been looking for ways to expand its menu, and this arrangement provided an efficient method for doing so. By early 1999, more than 87 units were selling Churchs Chicken products. The menu in selected markets also was expanded through the addition of Early Start Omelet sandwiches and jalapeño cheeseburgers in 1997. By 1999 gross restaurant sales had reached $438 million, while the store count neared 350, and the company was working on opening 20 to 25 new stores each year.

THE NEW MILLENNIUM

In 2001 the company helped celebrate its 80th anniversary by launching the Craver's Hall of Fame, which honored those "cravers" with the best stories of their dedication to White Castle. In another initiative building on the "what you crave" advertising theme, White Castle outlets began selling the Crave Case, also in 2001. The Crave Case was a mock-briefcase cardboard carton containing 30 burgers. Despite not offering a bulk discount on the 45-cent burgers, the Crave Case proved to be a huge hit as it built logically upon customers' tendencies to "buy 'em by the sack."

In this new century, White Castle slowed down its growth to around ten new restaurants per year, and even exited from one market, Kansas City, Missouri, where profits had been disappointing. Nevertheless, by mid-2004 the chain had reached 390 units. That summer White Castle received a huge amount of free publicity and cemented its cult status with the release of Harold & Kumar Go to White Castle, a major motion picture featuring two 20-somethings traveling across New Jersey on a quest for White Castle Slyders. The company had allowed the film's producers to prominently feature White Castle in the movie after reviewing the script.

In 2005 White Castle completed the rollout of a chainwide integrated credit card system that enabled customers to charge their orders, with no signature required for purchases under $25. Late that year, the company began testing a new model for its restaurants, one featuring a more modern interior design, with earth tones, branded artwork, accent lighting, and a mixture of booths and freestanding tables of various heights. Revenues for 2005 rose 4 percent over the previous year, exceeding $600 million for the first time.

Another milestone was reached in June 2006, when the 400th White Castle outlet opened for business. By that time White Castle had sold, over its 85-year history, more than 16 billion of its signature hamburgers. The company continued to grow conservatively and thoughtfully, with new restaurants financed from cash flow and new supervisors hired from within. White Castle also maintained its position as the fast-food chain with the second highest per unit sales average, behind only McDonald's. Continuity also prevailed on the ownership and management fronts: White Castle remained owned by the Ingram family, and Bill Ingram, grandson of the founder, carried on his leadership duties as chairman, president, and CEO. Furthermore, the fourth generation of Ingrams was heavily involved in the business in the early 21st century, with no fewer than 11 family members holding various positions at the company.

Maura Troester

Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

PSB Company; White Castle Distributing, Inc.; White Castle International Company.

PRINCIPAL COMPETITORS

McDonald's Corporation; Burger King Holdings, Inc.; Wendy's International, Inc.; CKE Restaurants, Inc.; Jack in the Box Inc.; Sonic Corp.; YUM! Brands, Inc.; Checkers Drive-In Restaurants, Inc.; Doctor's Associates Inc.

White Castle System, Inc.

views updated May 11 2018

White Castle System, Inc.

founded: 1921

Contact Information:

headquarters: 555 west goodale street
columbus, ohio 43215 phone: (614)228-5781 fax: 614)464-0596 toll free: (800)843-2728 url: http://www.whitecastle.com

OVERVIEW

White Castle first sold hamburgers for a nickel in 1921 in Wichita, Kansas. Today, the company claims, its sells 500 million hamburgers a year and has sold more than 7 billion in total. That's not bad for a company that is essentially a regional operation that has never franchised any of its units. White Castle remains a family-owned company with a chain of restaurants. The company operates 348 restaurants in 12 states and 17 cities in the Midwest and Northeast. White Castle System Inc.'s signature product is its distinctively shaped and flavored burger, which measures a mere 2.5 inches, has 5 holes, and is served on a steamed bun. The burger's unique flavor results from the patty being grilled on a bed of onions and having the bun placed on top of the burger while its cooking. In this process, the bun absorbs the onion flavor (as well as a good deal of grease). It has been said that consumers either love or hate the White Castle burger.

Long before McDonald's, White Castle became the first-ever hamburger chain in the country. However, it would later become supplanted by McDonald's in the collective American consciousness, as the Ingram family chose to keep the business a regional and family-operated enterprise. Despite this seemingly non-aggressive approach, White Castle is a highly profitable business.

The White Castle hamburger, a bite-sized square served on a soft and steamy bun (some would call it "soggy") often has been called a "cult" food item. It has even been judged an acquired taste and is subject to frequent put-downs. The company itself is deemed an also-ran in the American hamburger sweepstakes. The somewhat demeaning terms cannot erase the fact that, from its inception, the company has demonstrated steady growth. True, it is a slow growth. McDonald's, founded in 1954 and expanded by the franchise route, had 25,000 restaurants across the world by 2001. By comparison, White Castle, which was founded in 1921 and never franchised, had only 351 stores in 2001. Indeed, a slow and conservative approach is the creed the owners live by. New restaurants only open when profits make it possible. The owners have never borrowed to expand; the only time borrowing was ever involved was when founder Edgar Ingram borrowed $700 to start the operation. As a result, White Castle only opens about 10 to 20 new restaurants a year. Still, this approach has kept the company, which consistently posts $1.2 million in daily sales, in business for 80 years.

COMPANY FINANCES

Because it is a privately owned company, detailed financial data about White Castle is unavailable. However, this much is known: the business brings in about $1.2 million a day in sales. In 1999 annual sales reached the $420 million mark. That same year, it posted a one-year sales growth of 5.0 percent.

HISTORY

Before White Castle came along, ground beef-or hamburger meat-was regarded as the lowest of meat products. That started to change in 1916, when short-order cook J. Walter Anderson essentially invented the hamburger. It was Anderson's idea to cook ground beef as a flat patty and serve it on a bun. This approach proved popular enough that Anderson opened three hamburger stands in Wichita, Kansas, between 1916 and 1920.

In 1921 Anderson and Edgar Waldo "Billy" Ingram, a real estate and insurance agent, became partners and opened a fourth location, this one called White Castle. Ingram reportedly had to borrow $700 to go into the hamburger business. With the founding of White Castle, the hamburger was well on its way to becoming the quintessential American sandwich. In 1924 the company was incorporated as the White Castle System of Eating Houses.

That same year, Anderson and Ingram opened another hamburger stand in Kansas City. At first, expansion happened rapidly as throughout the rest of the decade the partners opened up restaurants in 12 major cities in the eastern region of the country, serving its small, square, and inexpensive burgers from five-stool hamburger stands.

In 1931, to assure the quality of its product, White Castle began using frozen beef patties and developed crush-resistant cardboard carton specially lined to keep the burgers hot. The following year, with a campaign first used in St. Louis, Missouri, White Castle became the first fast-food enterprise to promote its product through coupon advertising.(The deal offered five hamburgers for the price of two.)

In 1933 Ingram bought out Anderson's share of the company. A year later, with the business now his alone, Ingram established a company headquarters in Columbus, Ohio. That same year, White Castle Systems founded its PSB subsidiary.

FAST FACTS: About White Castle System, Inc.

Ownership: White Castle is a privately held company that is owned by founder's (E.W. Ingram) family.

Officers: E.W. (Bill) Ingram III, Chmn, Pres., and CEO; William A. Blake, CFO; Dean Cromer, Area Manager

Employees: 7,000

Principal Subsidiary Companies: In addition to its restaurants, White Castle System, Inc. owns and operates three bakeries in Rensellaer, Indiana; Even-dale, Ohio; and Carteret, New Jersey. The bakeries produce hamburger buns for the restaurants. The company also operates two meat-processing plants that supply the restaurants with their hamburgers and factories that produce snack foods. White Castle also owns and operates a subsidiary, the Porcelain Steel Building (PSB) Company, originally created to manufacture the stainless steel fixtures found in the restaurants. The subsidiary later solicited outside jobs, and it eventually attracted major industrial customers. Services include sheet metal fabrication, welding, powder painting, assembly, packaging, storage, and shipping. Its other subsidiary, White Castle Distributing, Inc., markets a line of frozen, microwavable hamburgers.

Chief Competitors: White Castle System Inc.'s top competitors include major hamburger franchises including McDonald's, Wendy's, and Burger King.

The company's expansion came to a standstill during the 1940s, due to World War II and the rationing of food products such as meat and sugar. Expansion resumed after the war but never at its previous pace. By the end of the decade, in 1949, the company added the distinctive, trademark five holes to its patties. The holes helped the hamburgers cook faster as the patties were cooked within the bun. (Five years later, the company would even patent its five-holed burger, which it called the "Slyder.")

During the next two decades, the company initiated several significant changes including curb-side service, more menu items, larger buildings in more suburban locations, and drive-through service. In 1950, as if anticipating the emergence of frozen food products, White Castle began freezing hamburgers for sale to customers to eat whenever they wished. In 1956 White Castle added milk shakes to its menu. By 1961 White Castle reached the one-billion-hamburgers-sold plateau. At that time, no other hamburger chain had sold as many. A year later, the restaurants began serving cheeseburgers. In 1968 White Castle hit the two-billion-burger mark. In 1982 White Castle established its own frozen food distribution company. It publicized this move by sending its hamburgers to marines stationed in Beirut. During this period, White Castle became a 24-hour, quick-service restaurant.

In 1992 the company built a hamburger plant in Covington, Kentucky, that produced 200,000 hamburgers a day. These sandwiches were frozen and sold in convenience stores. In 1993 White Castle even began selling its hamburgers and cheeseburgers in vending machines. A year later, the first White Castle hamburgers were exported to Mexico. In 1999 White Castle went online with a Web site at www.Whatyoucrave.com. In 2001 the company celebrated its eightieth anniversary.

STRATEGY

Through the years, White Castle's strategy has involved adhering to its stated mission, which is to serve the finest products, for the least cost, in the cleanest surroundings, with the most courteous personnel. Facility hygiene is extremely important to the company, who says that the two elements of its name—"White" and "Castle"—were selected to suggest to customers that they were eating in a clean and safe environment. To advance the idea of cleanliness, the company moved its kitchens from the back of its restaurants to the front, so that customers could actually see how their food was being prepared.

At the same time, White Castle has always been savvy in the ways of marketing and promotion. All efforts toward safety and purity of product were publicized. It openly claimed that fresh raw hamburger was delivered to its restaurants twice a day. Also, the company once hired a scientist from the University of Michigan to evaluate the nutritional value of its hamburgers. In a somewhat dubious test, the scientist fed a student nothing but White Castle hamburgers and water for three months. At the end, the student was examined and pronounced healthy. Though the methodology—and especially the rationale—behind such a test seems highly questionable, it made for great press.

Other marketing ideas were innovative and successful. White Castle was the first fast food restaurant to package its products in a take-out style. It was also the first restaurant to promote its business via coupons. The campaign was an overwhelming success, and it helped the company introduce its hamburger to a larger market. As far back as 1932, the company implemented a program that allowed consumers to tour restaurants and receive free samples of food products. Such goodwill gestures had a positive impact on consumers' perceptions about the organization. Other marketing innovations included publishing menu books and printing up free hand-outs (such as score pads for bridge, golf, and bowling) that advertised all of its products and locations.

CHRONOLOGY: White Castle Systems Inc.

1921:: J. Walter Anderson and Edgar Waldo "Billy" Ingram found White Castle in Wichita, Kansas
1924:: The company is incorporated as the White Castle System of Eating Houses
1931:: White Castle starts using frozen beef patties
1933:: Ingram purchases Anderson's share of the company
1934:: White Castle implements a food-coupon promotion
1934: Ingram establishes the company headquarters in Columbus, Ohio
1954:: White Castle patents its five-holed burger, calling it the "Slyder"
1961:: White Castle sells its one-billionth hamburger
1982:: White Castle establishes its own frozen food distribution company
2001:: White Castle celebrates its eightieth anniversary

Such promotional strategies proved to be far ahead of their time and would be later employed, with variations, by fast-food chains that would come after World War II. The company also proved to be forward thinking when establishing its organizational policies. Essentially the first-ever fast-food franchise, White Castle established a written set of standards for its restaurant operations, food preparations, and employee conduct. These policies formed the basis of the company's expansion, as White Castle replicated all of the elements that made the company so successful in the first place. The familiar White Castle restaurant faÁade came to represent a recognizable commodity in the eyes of the consumers (just as the golden arches would later do for the McDonald's chain).

INFLUENCES

White Castle's influence of the huge fast-food industry cannot be underestimated. Large chains that established themselves after World War II employed White Castle's strategies and innovations. Ironically, these companies would surpass in size and success the company that served as their business model.

That's not to say that White Castle became a dinosaur that couldn't survive in the emerging new world of mega fast-food franchises. Rather, White Castle has demonstrated continued growth and success. It just chooses to move at a slower pace and won't allow itself to be consumed by any over-ambitious stratagems. White Castle has retained a loyal clientele through the years, and it has attracted new devotees of its cult product, while other, larger fast-food franchises—such as Gino's and Jack in the Box—have come and gone.

In order to maintain its level of success and its modest but effective growth rate, the company continues to implement technical and organizational improvements. In 1993 Ingram issued a mandate to all of its stores to speed up its service while maintaining the highest level of food quality. In 1996 the company opened a computerized meat processing plant in Indiana that produces 16 million pounds of beef a year.

CURRENT TRENDS

At the start of the new century, White Castle envisioned opening 150 more restaurants in a ten-year period. Expansion includes new locations in Illinois, Ohio, Michigan, Indiana, Kansas, Kentucky, Minnesota, Tennessee, New Jersey, New York, Pennsylvania, and Missouri.

In 2001 White Castle started experimenting with a new design and logo for its restaurants. All locations would retain the trademark castle motif. However, the new design will be brighter, more colorful, and easier to read, and it is aimed at making the restaurants more "warm and appealing."

PRODUCTS

White Castle's best-known product is, of course, its square burgers with five holes served on a steamed bun. The inexpensive, bite-sized burgers (nicknamed "Slyders") can be bought singly or in packaging promotions such as the "Sack of Ten."

However, just like other purveyors of fast food, the company has expanded its offerings throughout the years. Menu items include cheeseburgers, jalapeño burgers, fish sandwiches, chicken sandwiches, chili, French fries, onion chips, cheese sticks, soft drinks, milk shakes, coffee, hot chocolate, frozen Coke and cherry drinks, and a limited breakfast menu. A recent addition to its menu is its Chicken Rings, a variation on the popular onion ring, and created, no doubt, in response to competitors' similar offerings such as Chicken McNuggets.

CORPORATE CITIZENSHIP

Company founder Billy Ingram firmly believed in treating people fairly, sharing his success with the community, and investing in the future of others. Accordingly, in 1949, the Ingram family established the Ingram-White Castle Foundation. In 1999, to celebrate its fiftieth year, Mary and E. W. Ingram, Jr. gifted $11 million to the foundation to provide financial resources for grants. Over the years, the Ingram family has donated $35 million to the foundation. The grants funded by the Ingram generosity support arts, education, health and human services, primarily in Ohio communities. The foundation has awarded more than $8 million in grants to support scholarships to college students and awards to outstanding teachers, as well as to increase community support of education.

GLOBAL PRESENCE

As a regional operation, White Castle System, Inc. has little interest in global expansion. However, it does have restaurants in Japan and Malaysia.

EMPLOYMENT

White Castle adheres to a "hire from within" employment policy, and it has committed itself to providing substantial growth opportunities for its workers. It points out that many people now employed at the upper levels of the organization got their start by working at restaurant counters or on factory floors. The community also actively seeks input from its employees, and it provides them with open communication through a toll-free employee hot line. According to the company, more than 15 percent of its employees have been with the organization for more than ten years. With an envisioned expansion of 150 stores over a ten-year period, the company expects its management ranks to grow by 50 percent, and it intends to fill the new positions with current employees.

SO WHY A CASTLE?

In its early years, White Castle restaurants were really just five-stool hamburger stands. In order to make the stands more recognizable in the consumers' eyes, as well as to protect company investment in the structures, employee Lloyd Ray designed a moveable, all-steel frame structure that enclosed the stands. For the design, Ray used a castle motif. Though it looked medieval in its concept, the motif was actually based on the famous old Water Tower in Chicago. (The Water Tower is one of the few structures remaining from "Old Chicago," which was largely destroyed by the famous "great fire," the one allegedly started by Mrs. O'Leary's cow). These structures had exterior and interior enamel panels. Enamel panels had never before been used in a building design. After 1934 all of these steel and porcelain structures were produced by the Porcelain Steel Building Company, the White Castle Subsidiary. In the beginning, company founder Billy Ingram wanted to use the motif of a white castle, because he felt it would represent purity of product (white) and safety (castle) to its customers. To this day, the castle motif remains the company's trademark visual façade.

The company offers both full- and part-time positions. Benefits and incentives include paid pension and profit sharing, health and life insurance, sickness and vision benefits, dental plan, free meals while working, uniforms, flexible hours, on-the-job training, performance appraisals, paid holidays and vacations, competitive salaries, and sales bonuses.

SOURCES OF INFORMATION

Bibliography

american business journals inc. "white castle testing new look." columbia business first, 10 august 2001. available at http://columbus.bizjournals.com

bbci.co.uk. "white castle hamburgers," h2g2, 5 february 2002. available at http://www.bbc.co.uk.

chenoweth, doral. "white castle still a cult hit in 80th year." the columbia dispatch," 12 september 2000. available at http://www.dispatch.com.

the greater greenfield chamber of commerce. "chamber profiles." greenfield chamber, 2002. available at http://www.green-fieldcc.org

hoover's capsule profiles. "white castle systems inc." hoover's online, 2002. available at http://www.hoovers.com.

ohio historical society. "mss 991-white castle system, inc. records, 1921-1991," 2002. available at http://www.ohiohistory.org.

"white castle opens plant in indiana." central ohio source, 30 august 1996. available at http://centralohio.thesource.net.

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. white castle system inc.'s primary sics are:

2599 furniture fixtures, not elsewhere classified

5812 eating places

also investigate companies by their north american industry classification system codes, also known as naics codes. white castle system inc.'s primary naics codes are:

337127 istitutional furniture manufacturing

722110 full service restaurants

Company Profiles for Students

White Castle Systems, Inc.

White Castle Systems, Inc.

Further Reading

White Castle System, Inc.

White Castle System, Inc.

Fast-food Pioneer in the 1920s

1930s and 1940s: Fast-food Innovator

Company Perspectives

1950s Through 1980s: Steady, Modest Growth

Key Dates

1990s and Beyond

Principal Subsidiaries

Principal Competitors

Further Reading

White Castle Management Company

White Castle Management Company

FAST-FOOD PIONEER

COMPANY PERSPECTIVES

FAST FOOD INNOVATOR

KEY DATES

STEADY, MODEST GROWTH

"WHAT YOU CRAVE"

THE NEW MILLENNIUM

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

FURTHER READING

White Castle System, Inc.

White Castle System, Inc.

Contact Information:

OVERVIEW

COMPANY FINANCES

HISTORY

FAST FACTS: About White Castle System, Inc.

STRATEGY

CHRONOLOGY: White Castle Systems Inc.

INFLUENCES

CURRENT TRENDS

PRODUCTS

CORPORATE CITIZENSHIP

GLOBAL PRESENCE

EMPLOYMENT

SO WHY A CASTLE?

SOURCES OF INFORMATION

Bibliography

For additional industry research:

More From encyclopedia.com

About this article

White Castle Systems Inc

You Might Also Like

NEARBY TERMS