Ray Kroc and the McDonald's Phenomenon
The Fast-Food Giant Changed Eating Out in America
Born in 1902 to parents who were Czechoslovakian immigrants, Ray Kroc rose from humble beginnings --including stints as a paper cup salesman and jazz musician -- to become one of Time's "Most Important People of the Century" by building McDonald's into the most famous and successful fast-food restaurant in the world.
In 1954, at the age of 52, Kroc was making his rounds as a struggling Prince Castle Multi-Mixer salesman when he came across Richard and Maurice McDonald's small hamburger shop in San Bernardino, California.
The establishment was simple, serving only a few items: hamburgers, french fries, soft drinks, and milkshakes. These two brothers became one of Kroc's best customers when they bought several of his machines from his otherwise dying business.
Kroc, curious about why the McDonalds were buying so many mixers, investigated the establishment further. With his keen sense of what American consumers were looking for when they ate out, Kroc suggested that the brothers expand their presence. They asked how they could do so, and he offered his services and became McDonald's national agent -- beginning a new age in franchising. That is how the little restaurants with the bright yellow arches began.
The First McDonald's
The first shop opened in 1955 in Des Plaines, Illinois, to resounding success, and the organization became the McDonald's Corporation. Six years later Kroc bought out the founding brothers for $2.7 million.
By 1965, there were more than 700 sites across the United States, following Kroc's innovative franchising model of granting a franchisee the right to only one store location at a time, thus retaining the ability to exert control over the franchises and maintain uniformity of service and quality.
Kroc established strictly standardized operations for all McDonald's franchises that included portion sizes and food preparation, packaging and ingredients.
Customer service standards were also high, although franchisees were allowed to decide how to market their businesses.
It wasn't long before McDonald's caught on in other countries -- by 2003, the corporation held more than 31,000 sites in 119 countries around the world. About 47 million people were being served every day, and sales were at a hefty $17 billion.
Although Kroc did not create the concept of the chain restaurant, he saw a niche and developed the plan to transform burgers, fries and shakes into a huge empire. Kroc was a stickler for consistency and cleanliness in all of his establishments. And he did everything he could to keep costs down so that even low-income people could afford a meal out at McDonald's.
Kroc Improves the System
Kroc's insight to standardize cooking and serving procedures meant that all processes were efficient and easily learned, even by new and unskilled employees. As teen employees came and went, this was important to the operation so that customers would continue to receive the food they expected in a timely manner. A refund was mandated to any customer who had to wait more than 5 minutes for their order.
Kroc established a welcoming franchisee arrangement so that he could increase his presence.
He used the method of charging a 1.9 percent commission on a franchisee's sales, rather than charging a large startup fee.
Owner of San Diego Padres
In 1974, Kroc retired as CEO of MacDonald's and, following his lifelong passion for baseball, bought the San Diego Padres baseball team. Although the Padres did not do so well, Kroc was a much-beloved presence at the games, topping their previous attendance record by more than 350,000 in 1974.
After one famously error-laden game against the Houston Astros, he used the stadium's public address system to tell the team's fans, "I suffer with you; I've never seen such stupid ball playing in my life." In 1979 Kroc handed off team operations to Ballard Smith, his son-in-law, but he remained the team owner until his death in 1984.
As McDonald's became the biggest restaurant company in the world, savvy salesman Kroc continued to live by his motto of providing customers what they wanted.
Kroc was chairman of McDonald's Corporation from 1968 until he passed away in 1984. Many McDonald's executives still adorn their offices with scrolls carrying Kroc's favorite inspirational quote:
"Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent."