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White Castle System, Inc.

 


Address:
555 West Goodale Street
Columbus, Ohio 43215-1171
U.S.A.

Telephone: (614) 228-5781
Toll Free: 800-843-2728
Fax: (614) 464-0596
http://www.whitecastle.com

Statistics:
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


Company Perspectives:


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


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.


Company History:

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. Ingram, 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 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.

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.

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. 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.

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 jalapeño 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.





Further Reading:


Bacha, Sarah Mills, 'Leading White Castle Continues to Be Domain of Ingram Family Lineage,' Columbus Dispatch, August 22, 1994.
Chenoweth, Doral, 'Change Comes Slowly, Surely at White Castle,' Columbus Dispatch, September 11, 1995.
Harden, Mike, 'Fast-Food Fortress,' Columbus Dispatch, June 9, 1996, p. 1C.
------, 'White Castle Finally Getting Its Due from Academia,' Columbus Dispatch, November 12, 1997, p. 1C.
Hogan, David Gerard, Selling 'em by the Sack: White Castle and the Creation of American Food, New York: New York University Press, 1997.
Ingram, E.W., Sr., All This from a 5-Cent Hamburger!: The Story of the White Castle System, New York: Newcomen Society in North America, 1975.
Kapner, Suzanne, 'White Castle: Fast Food's Most Consistent Player Turns 75,' Nation's Restaurant News, August 5, 1996, pp. 19, 152.
Kramer, Louise, 'White Castle Leaps into Co-Branding with Churchs,' Nation's Restaurant News, November 11, 1996, p. 3.
Mehta, Stephanie, 'White Castle's Successful Recipe: Burger, Burger, Burger, Fries,' Wall Street Journal, July 25, 1995, p. B1.
Meinhold, Nancy M., 'From `Doggy Bag' to Shopping Bag,' Food Processing, October 1991, p. 14.
Oliphant, Jim, 'White Castle: 70 Years of Sliders,' Columbus Monthly, February 1991, p. 26.
Walkup, Carolyn, 'E. W. Ingram,' Nation's Restaurant News, February 1996, p. 81.
Wiedrich, Bob, 'Every Worker's King at White Castle,' Chicago Tribune, November 30, 1987, p. C1.
Williams, Brian, 'Passing Family Business to the Next Generation Requires Give and Take,' Columbus Dispatch, March 1, 1999.

Source: International Directory of Company Histories, Vol. 36. St. James Press, 2001.




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