McDonald’s— The Growth of One of The Biggest Franchises The World Has Ever Seen
It is a compelling story like no other, switching hands from cofounders to Ray Kroc.
Now one of the most popular international fast-food restaurants, and a revolutionary idea. It all began with two brothers, who many now say got “swept” from getting what they really deserved. The mastermind behind it all, Ray Kroc, has reached heights that are too far above to see. Get ready to meet and explore the compelling story of McDonald’s.
Early Days and Founders
Maurice and Richard McDonalds were the “founders” of the world-class McDonald’s. Growing up fairly poor in the rural area of New Hampshire, there was self-built respect for money among their household. The journey starts with the desperate desire to quench Richard’s thirst for money. Originally both brothers had tried many startups, none of them necessarily failing, but all of them certainly not meeting Richards financial aspiration. Hence they turned their heads to look at other businesses that they could grab some incentive from. At the point, both brothers observed that only the local hot dog shop was thriving with business. Both of them set out a few towns away and opened up their very own hot dog shop that they soon saw exponentially grow. This was the start of a new venture.
First McDonalds
Looking at the growth of the hot dog shop was highly motivational and pushing for the brothers. They worked tirelessly, working towards their common goals of becoming millionaires by the age of 50. Seeing the growth of the hot dog shop made them both believe that they could do something bigger. They searched feverishly for something that they could do to generate even more profit, and improve margins. Eventually, Richard and Maurice McDonald, both opened up a “McDonald’s Hamburger” shop in San Bernardino. The first of every store of what would become a world-dominating franchise.
Cost and Efficiency
The brothers had their own way of operating and thinking. They came up with crazy business models that people could swear by would not work. They were named as “crazy,” and “unprofessional,” for the amount of risk they were taking for such a small business.
The prices for their burgers were just a mere 15 cents, half the times lower of the cost of their competitors. They also did in-car delivery, where customers could enjoy the luxury of their cars while the staff at McDonald's would come and give them their ordered meal. Soon later, they switched this to the self-service counter so that the customers themselves can come to the counter and order and checkout without a single waiter or waitress.
Both brothers would pry themselves on time. They cut down the cost of serving a customer from 20 minutes to 30 seconds, all using innovative strategies and technologies. They would cook the burgers ahead of time, wrap them, and warmed them under heat lamps when the customer arrived.
Ray Kroc
Ray Kroc is the man who eventually bought out both the McDonald brothers and, like how many can argue, “cheated” them out of a deal. Although not the founder of McDonald’s, he is definitely the man who turned this into a household name.
Childhood
It was always very evident to Ray’s parents that Ray was not like any other child when it came to how much ambition he had. It was to the point that it was even a little concerning for his parents. Consequently, Ray’s parents took Ray to a man who could supposedly predict Ray’s future by just looking at the bumps on his head. To their later astonishment, the man said that Ray would have a future in the food industry.
Almost immediately Ray had proven this statement by taking upon a lemonade stand and working at a local grocery store.
As Ray developed into a teenager, he had many dislikes. Unfortunately, one of them was school. He spent most afternoons daydreaming about someday quitting school and making money. This was his ultimate goal. He was just looking for a valid excuse to quit and do something that he felt was valuable, or at least better than school.
He did not have to wait for long though, World War 1 hit, and Ray quit school and joined the red cross, the first thing he did to earn the name “crazy.”
His red cross journey did not last long though, the war abruptly ended before he could be deported, and Ray came home. His parents pushed him one last time to go back to school, but it all ended in vain as he quit again after just one semester.
Job Life For Ray
After his childhood, Ray was off to support himself. After his dad told Ray that he could only get married after getting a job, Ray quickly went in search of a stable way of living. Then he quickly signed with the first job he could find, a salesman at a paper cup company.
People immediately saw a lot of Ray’s personality. Never a day did he not look sharp, with his tie always lying in the same place, and his hair perfectly combed. He even went as far as to get manicures to look flawless.
People also noted the Ray was a born salesman. With his first-class look and persuasive style of talking, people instantly fell prey, and Ray could easily close a deal. He used these tactics when he was negotiating with Walgreens for a potential sign and was promoted to top salesman position when Walgreens accepted his proposal.
Becoming the top Salesman put Ray, his wife, and his child, in a comfortable financial position, and for many years he pursued this job and life. Until he met one of his clients.
While selling to a client, he noticed that their food store was using a machine that could make 5 smoothies at a time. He promptly fell in love with the machine and with whatever money he had, he bought out the company that sold the machines.
Fast forward some time, he was making ample money by becoming a vendor for food stores that wanted to buy these machines. This structure of business was going really well for Ray until people stopped buying the machines. They just didn’t see many people coming to their stores anymore, thus eliminating the need for that many smoothies at once.
Despite these hard times for Ray’s business, he still had one strong customer, from San Bernardino, and they were ordering 8 machines at a time. Once curiosity got the best of Ray, he flew over to see the business himself.
Transfer of Ownership
At McDonald’s, Ray fell in love with the business and its efficiency. He immediately wanted to be a part of McDonald’s journey and asked to sign a deal together. Reluctantly, the brothers agreed to a deal where Ray would only get limited say in the company. Ray’s ultimate goal was to turn this small store into an international franchise.
The Begining of Friction-Filled Relationship
Ray immediately started expansion. He had big plans for the company, and he wanted to move as fast as possible. The two brothers, however, didn’t exactly like the ideas that Ray had and was quick to dismiss them. However, Ray did not stop there, he really liked Mc Donald’s, and wanted to see it flourish and grow. So he set out to get more stake and say in the business. The only way to do that was to resign a contract that was further in Ray’s favor.
Eventually, it came across to Ray that the only way to do anything was to completely buy out the brothers. He had to propose a deal. He phoned up the two brothers and ask what he needed to give them for them to drop the business. To Ray’s astonishment, they both agreed to let go of the business for a certain amount of money.
The only problem was the amount of money that they needed. $2.7 million. That is a lot of money, to make matters worst, 1 million dollars back in 1961(the time of the deal) is now worth a little more than 8.5 million dollars. Both the brothers did not ask for this money randomly. They wanted 1 million for each, and 700,000 for taxes. This ties back to their original dream of becoming millionaires before the age of 50.
Unfortunately, Ray did not have that kind of money and did not know where to get. But like how light has been shining on Ray for a long time, it shined again and brought a character named “Harry” into the picture.
Harry taught Ray to do real estate business, and Ray followed his advice. To his grace, Ray got just enough money to give the brothers what they wanted to leave the place.
Now it was time for Ray’s masterminded operation.
Growth and Expansion
Ray had been meticulously planning the growth of McDonald’s, and how he was going to accomplish it. Now since his biggest obstacle was gone, (the two brothers), he could start doing whatever that was he needed to do to turn his vision into reality. Again, the name he was given was “crazy.”
Building a Franchise
Since the beginning, Ray only had one big goal in mind. Turning McDonald’s into a worldwide franchise. The first big step that he took towards this is opening the first McDonald’s in their new chain. This memorable moment took place on April 15, 1955, in Des Plaines, Illinois.
Here is some other important milestone:
- Trading in the stock market publicly in 1965
- Before the end of the decade (1970), McDonald’s outlets topped 1,000
- 1962 — Golden Arch was created
- 1963 — The clown “Ronald McDonald” was launched
- Product Launching- Big Mac(1968), Egg McMuffin(1973), Happy Meals(1979), and Chicken McNuggets(1983)
After
Now we look back at the incredible journey it took to get here. Although we have heard on some occasions the McDonald brothers saying that they have not gotten enough recognition, we still see the amount of impact an outside source like Ray Kroc had on the business. Now, McDonald’s is worth over 150 billion dollars and has no sign of slowing down.
By: A 13-year-old girl named Shakthi
Here are some sources that I used to refer to:
