What you can learn from the McDonald’s story : A tale of persistence

“Luck is a dividend of sweat. The more you sweat, the luckier you get.” — Ray Kroc

In this world, there are some people who just won’t quit, whatever life throws at them. I like to think these people are always rewarded in the end. That’s not always the case but in this story it is. Ray Kroc is one of these people.

Ray was 52 year old, and sold multi-mixers (milk shake machines) to restaurants for a living. He had been a salesperson for over 30 years and had been waiting all his life for an opportunity to present itself.

And one day, it came knocking.

A restaurant owner in San Bernardino, California placed an order with Ray for 8 milkshake machines. He was surprised by such a large order and decided to go and check out the place. When he arrived, Ray was amazed to find the very first fast food venture in the world. The sign said “McDonald’s.”

Ray met the owners. Two brothers who had come up with the concept revolving around two elements, speed and simplicity :

• Speed : enhances the customer experiences and allows you to differentiate yourself from the competition but also allows you to operate efficiently, serving the most amount of customers in the minimal amount of time, hence maximising profits.
• Simplicity : The McDonald brothers had launched various restaurants before this one, and had found that most of their sales were concentrated in a few items. They decided to cut everything out of the menu except for these, furthermore reducing their costs. This also allowed McDonalds to differentiate from it’s competitors.

Although their business was great the brothers couldn’t successfully expand.

Previous franchising deals had failed because of quality control issues.
When Ray saw this business, he instantly saw the potential. He knew that the franchise model was the way to go but it had to be executed properly.

After talking the McDonalds into signing a deal with him, appointing him director of franchising, Kroc got to work.

His sales experience and personal skills allowed him to get the franchises going.

The business grew exponentially as the demand for fast food kept climbing.

Nonetheless, Ray wasn’t making money. He had cut a bad deal with the brothers and his share of the profits were merely covering his expenses.

Thankfully for Ray, Harry Sonneborn, a businessman he met came up with what would become the company’s business model.

He advised Ray to buy land and lease it to the franchisees, therefore collecting monthly income through the rent but also taking a share of the franchise’s profits. That was a brilliant idea, and Ray seized it. Harry Sonneborn later became CEO of the McDonald’s corporation.

Ray bought the two brothers out in 1961 for 2.7 million dollars and the rest is history.

What can we learn from the McDonald’s story ?

• Be persistent : No matter how many times you fail, get back up. Persistence is to the character of man as carbon is to steel. Napoleon hill.
• Be enthusiastic : At first Ray struggled to get people to believe in the project. Fast food was a totally new concept and as any new innovation, it needed consumer education. Ray’s enthusiasm for the whole idea is what made the McDonald’s brothers take him onboard in the first place. His enthusiasm was what made most of the new franchisees take the leap. If you strongly believe in what you are selling, than people will believe it to.
• Think marketing : The brothers had already figured out most of McDonald’s key marketing elements. The Golden Arches on the logo were designed to make the restaurant stand out. But Ray really understood the essence of the place. He knew McDonald’s represented something bigger than burgers. It represented America. He sold the dream to his franchisees who then sold the dream to their customers.
• Diversification is king : Selling burgers wasn’t what was going to make Ray rich. Harry came up with the solution. Buying properties and leasing them to franchisees. That way they earned revenue from the monthly rent and kept a percentage of the franchises revenue. Diversifying your sources of income allows your business to stay healthy when you face a downturn in one of your streams.
• Listen to people’s ideas (there often better than your own): One of Ray’s biggest strength is his listening abilities. He recognised that the franchisees had the field-knowledge and used their ideas. Ronald McDonalds, the clown, for example, was first implemented by a franchisee in Washington before going worldwide. Listen to people, give them credit for their ideas and reap the rewards.

To summarise :

If you want to succeed, be patient. It took Ray 30 years of dedication and hard-work to be fully prepared to seize this opportunity when it arose.

It is often said, that overnight successes take on average 10 years.

Find something you are passionate and sell it with enthusiasm.

Understand the why behind your business, your core values that you will put forward through your marketing.

And try as much as possible to diversify your business streams of income to keep going when shit goes down the pan.

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