Ultimate Story of American Capitalism

Hamburgers, french fries, and milkshakes created a new world order.

An American success story. Few entrepreneurs can claim to have actually changed the way we live, but Ray A. Kroc is one of them. His revolutions in food service automation, franchising, and advertising have earned him a place beside the men who founded not merely business, but industry.

— Grinding It Out: The Making of McDonald’s

“Columbus discovered America, Jefferson invented it, and Ray Kroc Big Mac’d it.” — Tony Robbins

The Founder with Michael Keaton explores the rise of an aging fifty something man on his last straw, building the next great American export. As Japanese and German automakers devoured American consumers, Raymond A. Kroc’s patties were being devoured by people who had never seen a burger before. The Japanese only knew fish and rice for thousands of years, until McDonald’s opened one tiny, small location in Tokyo. Business executives who succeed in one field, inevitably develop a fever to expand. Empire building. Ray A. Kroc in The Founder stumbles onto success, when a slick businessman named Harry Sonneborn tells Michael Keaton that one doesn’t make money selling burgers on the cent, but one makes money by controlling the land on which it all sits. Thus Ray Kroc overthrows the McDonald brothers from their own operation, Nick Offerman and John Carroll Lynch as the lovable Dick and Mac brothers. The film ends when Dick asks Kroc why he didn’t just copy it, since Ray Kroc was shown the details of how the McDonald brothers ran their store. Why the power play to take the name?

The answer is simple. McDonald’s. It’s an American name. Small towns had two establishments, a church and a government building. God’s cross and an American flag. Now there would be Golden Arches in every town too. Years later when Fred Turner succeeded Kroc as the architect of modern Micky D, Den Fujita was importing women’s bags in Japan. The upstart founded his little operation by age twenty-five, importing European and American golf clubs, shoes, and eventually high end designer bags. Fujita knew the Japanese had a love/hate relationship with the outside, who’s language comes from China, religion (Buddhism) comes from Korea, technology like IBM from the U.S. They were fascinated by glamorous novelty, as Japanese women wore American designer handbag but the culture also despised the Americans for WWII. Japan is historically anti-foreigner. Fujita spent time in Chicago, and had a different view of looking at the overseas market.

Ray A. Kroc was past fifty before he ever thought of getting into the fast food business. Within a decade Kroc became a millionaire.

The market was always there. The high end Nieman-Marcus, Saks Fifth Ave, and huge department stores like Sears and J.C. Penney could have grabbed the overseas market and won, but they hardly left North America. So how did burgers become the greatest asset in United States trade relations, just like oil or modern day Apple phones? Though McDonald’s was born out of suburbia, taking small towns by storm, Den Fujita thought to inverse that trend. Urban cities in America were crumbling at the time, such as Times Square in the 70’s but not in Asia or Europe. In 1971, McDonald’s and Den Fujita made a 50/50 partnership to open in Japan. Fujita argued with McDonald’s executives about opening in the city vs. suburbs. An enormous factor for McDonald’s rise is the owner/operator had great autonomy, who themselves come up through the system that McDonald’s built I.E. have their own suppliers, distribution, etc. For standard 3% service fee and 8.5 % rent. Individual franchisees have most or all of the control over marketing, store layout, etc.

McDonald’s had flopped in the Caribbean and the Netherlands, who’s owners catered to the whims of local fare. Makes sense. It’s easier to tweak the food than change the taste buds of different countrymen. For example, Australia eats hamburgers without pickles. Aussies loved it with lettuce, tomatoes, with surplus of mayonnaise, compared to Americans- pickles, onions, ketchup, and mustard. But wrong! What gave McDonald’s it’s competitive advantage was burgers. Fujita lectured at Japanese universities about the nutritional benefits of burgers, making outlandish statements like how Americans are tall, white, and blonde because of burgers. Japanese are short and not blonde because of years of fish and rice. Japan had never seen a burger before, and most didn’t consume beef of any sort. These days, Australians consume the American version because tastes are acclimated, especially for children who share little of their parent’s native taste buds.

“Ours was the kind of American story the public was longing to hear.” -Ray A. Kroc

Den Fujita made way with opening in Tokyo’s heartbeat the Ginza, where all imports come first into Japan. The busy location was premium for rent space, as Fujita made a deal to secure the bottom lot of five hundred square feet. The contract gave Fujita three days to build a McDonald’s, an operation usually taking three months. The other tenants at the Ginza didn’t want construction slowing business. Even worse, Fujita’s five hundred feet was too small for a functioning restaurant. In a country that invented square watermelons, space wouldn’t slow down this entrepreneur from Godfathering McDonald’s into Japan. Much like the scene in The Founder when Dick and Mac practice on a tennis court with chalk, the orientation of their first McDonald’s, Den Fujita grabbed all his engineers and construction teams, choreographing exactly how to build three months worth of work in exactly 39 hours. That Friday was closed for holiday, along with Saturday and Sunday. McDonald’s was planned to open on Tuesday, July 20, 1971. Ray Kroc and his officers from Oak Brook flew to Japan on Saturday the 17th. When Kroc asked where the hell the store was, Fujita pointed to a glass window with nothing inside.

Ray Kroc blew up big time. “Ah we will do it”, Den Fujita simply said. Order counters were pushed far back as possible, grills were creatively jigsawed together. When Den Fujita opened Japan’s first McDonald’s the store brought $3,000 on the first day. Couple months later, it broke the all time McDonald’s single day record with over $6,000 revenue in a day. Fujita went over the top for marketing, like putting posters of motorcycle boys “one shade removed” from the Hell’s Angels. When an official from Oak Brook arrived to inspect, he was dismayed at these posters of gangsters eating burgers. But “Ah it’s all OK” replied Fujita, who said it appealed to teens and kids… The next generation of Japanese consumers. Japan was McDonald’s first success opening overseas. By the 1990’s, McDonald’s International brought in $8.6 billion in food sales outside the United States, accounting for 39% of its $21.9 billion worldwide totals. As for Den Fujita, mere weeks after opening that first Japanese store, Fujita continued to plop more McDonald’s. By the 1990’s, there was over one thousand McDonald’s in Japan. More importantly, Fujita pioneered a new management style favoring young, aggressive, and creative individuals over Japan’s old model of hiring based on seniority, compliance, etc.

“The eating habits of old Japanese are very conservative. But we could teach the children that the hamburger was something really good.”

-Den Fujita. Founder of the first McDonald’s in Japan.

Despite their diverse backgrounds, there are some common threads that run through most of McDonald’s managing directors overseas that provide insight into the chain’s unique success on foreign soil.

For example, while most of the international partners are foreign by birth, virtually all of them are not traditionalists in their homeland. Indeed most have an affinity for American business practices and American entrepreneurs…

-Behind The Golden Arches by John F. Love.

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Mark Namkoong Life+Times

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Drawing and drafting board for the imagination.

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