The Story of McDonald’s That Will Fascinate You
From the last month or so I was reading this famous book “Grinding It Out”. Yeah, it took me one month and a few days to complete it as I’m a slow reader. Also, I wasn’t consistent with the book initially but after a few chapters got gelled with the story.
I thought McDonald’s is a place that’s selling hamburgers (burgers) to the people. But definitely, that’s the wrong eye to see at McDonald’s. I have corrected my view. And, now I want to correct your view towards McDonald’s. Hence, created my version around McDonald’s Story or McDonald’s Case Study.
The McDonalds Brothers
Maurice (nickname Mac) McDonald and Richard (nickname Dick) McDonald were the brothers. I know what you’re thinking. Yes, McDonald’s was a surname. And, remember it was and not it is.
Okay, coming back to the story The McDonald’s Brothers weren’t in good shape financially from their childhood. They together did quite a number of odd jobs like working in a studio, moving scenery, setting up lights, driving trucks, and so forth.
In the early 1930s, they both decided to get started with their own business. And, by the mid they went ahead with the foodservice business because they had a good cook. Later, around 1940 they took a loan and started their store “McDonald’s”.
The store wasn’t doing good. The Brothers weren’t able to satisfy the handful of customers. They closed the store for some time and analyzed what went wrong. In 1948, they reopened the store with limited things to serve namely hamburgers, French fries, and beverages. They made a point to serve minimum focusing on the quality, speed, and robust system.
Sonner the wheel started rolling and the McDonald’s was sustained and the word started spreading in the locals.
The Multimixers and Ray Kroc
It was the time of 1954 when Multimixers were the thing and Ray Kroc was selling them. Just to give you a background of Ray, he is someone who from childhood had worked at various places selling various items. The very first place where he worked as his uncle’s drugstore. Here he was introduced to the power of charm and enthusiasm in selling anything.
Ray’s father wanted him to study well as he himself had to drop school at a very early age. But, Ray was never interested in studying but working. He even lied about his age to work as a Red Cross Driver after World War I. His mother gave her the skill of playing the piano which was also utilized to work and earn. He wasn’t an avid reader but a deep thinker. He had an interest in Baseball as well because of his father.
Ray sold Paper Cups for 17 years of his life. And, somewhere his instinct told him that Multimixer is the next big thing. The next moment he started selling Multimixers. He got a few calls of folks demanding the Multimixer possessed by the McDonald’s. He was astonished by the fact why they weren’t buying the Mixers from him.
Ray went to see McDonald’s in San Bernardino. He saw a drive-in restaurant where people were standing in a considerable queue, humble building, golden arches, happy customers, everything so smooth, and the cleanliness. He was so amazed by it that he waited to meet the Brothers and convinced them to tell about McDonald’s. After, hearing the story that night he was thinking about McDonald’s and came up with a single word “Franchise”.
McDonald’s Franchise
The very next day Ray proposed the idea of opening the Franchise of McDonald’s at multiple places. On this, the Brothers replied that they tried but it didn’t work out. They wanted to have some standards, uniform systems, keeping quality and speed at the top for every store and it wasn’t easy. They wanted to enjoy life now instead of grinding.
Ray took a few minutes and said, “You could ask anyone do this for you”. The Brothers confusingly said who will do this for us. Ray replied, ”What about me?”.
Hearing that The Brothers took some time and then finally got ready. They prepared a contract bearing that every store will have the same building, design, menu, food recipe, and everything keeping the quality and speed as a top priority.
Ray agreed and signed the contract. And, here starts the journey of taking McDonald’s to new heights.
Ray and McDonald’s
The McDonalds Brothers had a few franchise stores in a few regions before the contract was signed with Ray. Ray wasn’t much concerned about existing stores at the time. His full focus was on opening the first-ever store all by himself. He found a good location in Des Plains and went ahead to open the store.
Ray’s wife Ethel wasn’t happy with Ray’s decision of chasing another business at the age of 52. But he was too hard to stop. He arranged money by mortgaging his home and used the funds to build the store. The Architect found that the design needs some modification because of the location. Ray discussed the same with the Brothers. They somehow agreed to allow the changes but never gave the agreement in writing. Ray found Brother’s behavior peculiar.
Anyways, Ray kept going and built the first-ever McDonald’s Franchise Store. The key people that made this particular store possible were June Martino and Ed MacLuckie. It took 1 year to make everything run smoothly. Now, Ray started looking for people who were interested in McDonald’s Franchise. He used to pitch them, make them aware of standards, and end up selling the Franchise.
Ray took a few decisions to maintain McDonald’s standards keeping the long-term vision in mind. The most crucial decision was that each operator had to look and arrange its own supplier.
Ray had a thought “There is a basic conflict in trying to treat a man as a partner on the one hand while selling him something on a profit on the other”
He said if he will be supplying to operators then his focus will shift from McDonald’s to supplying business. Also, McDonald’s was meant to keep the environment Family-friendly. So, no vending machines and third-party service were allowed in any store.
McDonald’s Real Estate
Ray was opening the McDonald’s Franchise as per the convenience of finance. It would be difficult for him to pay back the debts if growth wasn’t paced. Here, enters another player Harry Sonneborn. He wanted to be part of McDonald’s and left his previous job for the same.
Ray had words with him and knew that McDonald’s needed Harry more than Harry needed McDonald’s. Ray proposed to him the minimum salary possible for Harry to survive because of a funds shortage. Harry and Ray had different approaches with the same vision of making McDonald’s more than just a name. Harry told Ray that McDonald’s needs to be in Real Estate Business rather than the food business.
He explained that they can earn handsome profits by becoming the landlord of the land. And, ask the franchise operator to pay rent apart from the franchise serving fees. In this way, they’ll have more control over its franchises and grow faster. That’s where Franchise Realty Corporation born. It was the face for McDonald’s dealing in real estate.
The essence of McDonald’s was serving customers with quality and speed. Whereas, the major income stream was real estate.
McDonald’s Marketing Strategy
McDonald’s was making handsome money from its real estate dynamic. But at the core of selling hamburgers and fries was important. Around this time the market was full of Food Businesses selling so many items. The majority were out of the league of McDonald’s.
The Operators at their places started facing stiff competition with the products like fish, desserts, etc. Therefore, they came up with the food items like Filer-O-Fish and Hot Apple Pie. These were the items that were proved to be revolutionary in making McDonald’s the first choice for Customers.
The menu was always innovated by McDonald’s especially because of its operators. They used to come up with the add-ons on the menu. McDonald’s always kept its food affordable as its earning source was real estate. That resulted in happy and repeat customers which in return led to more customers.
McDonald’s always gave importance to Marketing and Advertising Campaigns. Ray used to spend a fixed amount on national campaigns that in turn helped the local stores with their sales. The clown, Ronald McDonald was an iconic way of marketing by McDonald’s.
Ray had this phrase QSCV that meant Quality, Service, Cleanliness, and Value at the core of everything happening in McDonald’s.
Hamburger University
To maintain standards among thousands of stores and keep the uniformity of systems, McDonald’s started Hamburger University. There was an operator in a store that noticed that the crew lacked greeting the customers. This was only among the number of mistakes.
So, he started teaching his crew through lectures. He used to teach them everything that would eventually enhance the customer experience. The first-ever batch had 18 students. Later, this system was implemented at a few other places and Hamburger University was born.
It gave them a degree of Bachelors in Hamburgerology with a minor in French Fries. What was outstanding about this education and university was that whatever crew used to learn, they used to implement it straight away at the store upstairs.
By 1963, Hamburger University gelled with McDonald’s. A separate space in the basements was the place where lectures were given.
McDonald’s The Brand
Around 1961, Ray wanted to get control from The Brothers. Mainly because they started having clashes with their approaches towards McDonald’s. In the end, The Brothers sold McDonald’s except the one store in San Bernardino is $2.7 Million.
In 1963, McDonald’s was growing at a pretty fast rate. 110 stores all over America. But the vision was to take it to every corner of the world. And, therefore McDonald’s went public in 1965 with the Initial Public Offer (IPO). The first day started with a share price of $22.5 and by the end, the price shot up to $30.
The same year McDonald’s celebrated its 10th Anniversary. In July 1966, McDonald’s recorded sales of $200 Million. The new trend and eating habits of Americans led to the start of McDonald’s with the Breakfast. And, it did that too extra-ordinarily well.
Today, McDonald’s has 38,695 stores all over the world, according to 2019 statistics. Every store with the same ethics, systems, value, and quality. Ray even after getting retired from the post of Chairman, spent his last breath working for McDonald’s. He employed a chef to improve the quality and nutritional value of the menu.
Ray used to believe that “Any man with common sense, dedication to principles. And a love of hard work can do it”.
Final Words
McDonald’s is a word that I have heard a lot of times since my childhood. But never actually considered it. In fact, just a day before writing this story I ate the first-ever McDonald’s Burger. And, that too because I had eaten a book in the McDonald’s but not the real McDonald’s. Lol!
Anyways, McDonald’s definitely has a great story. A story that says “There will be a thousand reasons of not doing something, but you gotta stick to that one reason and do it”. Mr. Ray Kroc was the man who was just cranky about McDonald’s and his customers. He never ever did anything that may benefit him but not his customer. His quality of having empathy towards customers is just commendable.
Last but not least, whatever happened with Ray throughout McDonald’s he was persistent.
So, if you want to take one thing from Mr. Ray then it has to be “Persistence”.
Go, embark, and accomplish your dreams.
And, remember that I’ll help you whatever it will take.
That’s all for this blog.
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