here is out it works:
In N Out competes with
McDonalds
Wendys
Burger Kind
Hardees
Jack n The Box
DQ...anyone else in that "fast food" class
In N Out isn't uniquely remarkable, but they are certainly better than their competition: value and quality of product. The burgers aren't simply good, but they are relatively cheap and of higher provenance than the others. That is rather important.
They don't compete with 5 Guys or BurgerMeister or any of those "casual semi-cafeteria joints." It's a different tier of restaurant. I like all of them for their own reasons (well, except for the fast food list...I only really like 1 or 2 of those).
The fries at In N Out are a bit disappointing, but the deal with that place is knowing how to order stuff from the hidden menu. Again, this doesn't suddenly make everything mind-blowingly awesome, but it adds to the service what isn't immediately apparent from their simple menu.