After fifty years, life is just beginning! Such a statement seems incredible, and yet it is possible. And confirmation of this is the seller’s story paper cups, mixers, who at the age of 52 began to build an empire that expanded throughout the world. We'll talk about Ray Kroc, the founder of an international restaurant chain. fast food McDonald's.
It is surprising that Ray Kroc was neither the inventor of the concept of fast food, nor the founder of the first McDonald's restaurant, he was not even the author of the idea of the legendary golden arches. The story of how the business was created seems incredible. He owes his success to his own perseverance and enterprise.
Reference: Today, the McDonald's restaurant chain consists of more than 37 thousand establishments around the world, and more than 100 billion hamburgers have been sold. More than 30 thousand people came to the opening of the first McDonald's restaurant in Moscow in January 1990.
Read how Ray Kroc was able to build a multi-billion dollar empire on someone else's idea.
Where did the “founder” start?
The future founder of the McDonald's empire, Ray (Raymond Albert) Kroc, was born in the suburbs of Chicago on October 5, 1902. His father, Louis Kroc, worked all his life at Western Union, trying to give a decent education to his children: Ray, his younger brother Bob, and sister Lauren.
However, the younger children were much more eager to learn than Ray. Education was not to his liking. In the work “McDonald's. How an empire was created,” the entrepreneur says that he did not like reading books; it seemed too boring to him. But he really loved to dream, think, and act.
“My relatives teased me as a “dreamer” - after all, even when I was in the last grades of school, I came home delighted with the plan I had come up with or the drawing I had drawn. I have never believed that dreams are a waste of energy as long as they lead to certain actions.”
Ray Kroc's biography is replete with all sorts of undertakings; the future founder worked somewhere throughout his life: in a grocery store, in a pharmacy, in his uncle's music store during his school years.
He says that "work is the meat in the hamburger of life."
He sold coffee beans, small dry goods, worked as a driver of a Red Cross ambulance, for this he had to lie and exaggerate his age.
This is interesting: Another person who hid his age at the recruiting station was a modest guy who, while other guys were walking around the city, courting girls, sat and drew pictures. His name was Walt Disney.
During his school years, Kroc was fond of baseball (later, having become the “king of fast food,” he acquired the San Diego Padres baseball club), and played the piano well thanks to the lessons his mother gave him. During his last school summer, Ray worked as a lemonade and soft drink salesman. Even then he realized that with the help of a smile you can influence people.
He saved all the money he earned and used it to open his first business with a friend - a small music goods store. Having chipped in a hundred dollars, the friends rented a small closet for 25 dollars, in which they sold exotic musical instruments, notes.
Ray entertained customers by playing the piano and singing his own songs. But sales were very bad, because almost no one knew about the existence of the store. A few months later they had to say goodbye to the business: the friends sold the goods to another store, divided the proceeds and closed. This was the first, but not the last fiasco in Ray Kroc's entrepreneurial activities.
He always wanted to sell something and play the piano for money, and even in his youth, Ray was an irresistible heartthrob. This explosive mix once led to him almost getting into big trouble while playing music in a club that turned out to be a brothel.
He later worked as a stockbroker for a company that later turned out to be a trading office for diluted share capital. As a result, the company went bankrupt.
Family, paper cups, mixers
At that time (in the early 20s), the Krok family moved to New York, which was a real blow for Ray, because he already had a relationship with a girl, Ethel Fleming, with whom he was going to get married. The family eventually returned to Chicago. Ray wanted to marry Ethel, but his father forbade him, saying that first he needed to find a job, more serious than the position of a messenger or bellhop.
In 1922, Ray got a job as a sales representative for the Lily Cup company selling paper cups. There were no more objections to starting a family from the parents, and the young people got married.
The sale of cups was slow. Ray compared this business to a bear that grows fat all summer and lives off it in the winter. Sales only did well in the summer, but Kroc felt that paper cups had a lot to do with the way America was going. At the same time, he worked as a full-time musician at a radio station, where he played in the evenings after his main job. After night shifts, he went home, began to undress on the stairs, and as soon as his head touched the pillow, he was already fast asleep.
“I had great ambitions, I couldn’t idle even for a minute. I firmly decided to get rich so that I could afford to have beautiful things, and I must say that earning money from two jobs gave us this opportunity.”
In 1924, Ray and Ethel's daughter was born, and he had to work even harder. He earned $35 a week, and in 1925 he achieved his first successes: he entered into an agreement to supply large quantities of cups to the Walter Powers restaurant. There were other successful projects, and the company increased Kroc's salary as a reward for his zeal. So he was able to buy a brand new Ford.
At that time, Ray and his wife and her sister moved for a while to Miami, where he performed with an orchestra and worked as a real estate agent.
In 1930, Ray's father died of a cerebral hemorrhage. Collapsed in those years stock market- all of Louis Kroc's assets became worthless, he could not survive this blow.
Interesting fact: Among his father's papers, yellowed by time, Ray found a phrenologist's report on the interpretation of bulges on the head of Raymond Kroc when he was four years old. The report stated that Kroc would become a chef or his life would be connected with cooking. Amazingly, the prediction came true.
Returning to Chicago, Ray continued to sell paper cups and decided to devote himself only to this business, ceasing to waste time on various part-time jobs, until the beginning of 1938, when he organized a company selling mixers. His wife did not support his initiative, and the relationship became cold.
The initial data for the new business were: a suitcase with a sample of a new multimixer, huge ambitions and an entire country in which the owners of soda stands and cocktail bars were waiting for Ray to offer them a product. This is what the newly minted businessman thought, but he was wrong.
Kroc turned into a real mobile team, which consisted of one person - himself. He traveled around the country, offered to buy mixers, rented an office, and hired a secretary. The mixer business led Ray to a mortgage on his house, $100,000 in debt, and a desperate wife.
Who invented McDonalds
In the first half of the 20th century, snack bars for car enthusiasts, the so-called drive-ins, were common in America. Their essence was that motorists drove up to the establishment in a car to order and receive an order; they did not even need to get out of their cars.
However, such a system had many disadvantages: slow service, costs for waitresses’ salaries, and dishes. The first establishment of the brothers Dick (Richard) and Mac (Maurice) McDonald was just such a restaurant.
However, its founders decided to modernize existing system- came up with a fundamentally different model:
- introduced a self-service system;
- orders were served in disposable paper dishes;
- the assortment was reduced to a minimum, only hamburgers, fries, drinks remained - only 9 items;
- all food preparation functions were clearly distributed among the kitchen workers.
The brothers closed the first restaurant and opened a new one using the described model. Orders were prepared almost instantly, the dishes were disposable, so you could eat anywhere: at home, in the car, on a bench in the park. The idea turned out to be very successful, the demand was huge.
By 1954, when Kroc's business had stabilized, he became interested in a small fast food restaurant located in San Bernardino, California. Ray's interest in the restaurant was sparked by the fact that the owners had purchased eight mixers. This means that they were whipping forty cocktails at the same time. It was McDonald's.
Ray Kroc and McDonald's
Arriving in San Bernardino, Ray Kroc met the McDonald brothers. They told him about the business, how everything worked, and asked if Kroc knew someone who could help them build a network. Ray was inspired by the idea and replied that he himself was such a person.
Kroc's original idea was to open a chain of McDonald's restaurants to which he could supply mixers. An agreement was signed with Mack and Dick, according to which Kroc could sell McDonald's franchises while receiving a 1.9% commission. The brothers were entitled to 1.5% of his share. True, as it turned out, permission to use the name McDonald's was given not only to Kroc, but also to a dozen other establishments in California and Arizona.
This is interesting: The first McDonald's franchises sold by Ray Kroc cost $950. Now their cost in Europe reaches 1 million dollars.
The entrepreneur liked to repeat that he does not sell hamburgers, he sells business. McDonald's restaurants began to grow by leaps and bounds across America. Kroc gathered around himself a team of professionals who helped build the business. He took risks, took out loans, mortgaged all the property he owned, entered into long-term sublease deals, and purchased land plots on which it was planned to build new restaurants.
In 1959, Kroc's net worth was $90,000. In 1960, the 200th restaurant opened. Despite the fact that Ray was absolutely absorbed in work, his personal life did not remain on the sidelines. He divorced Ethel, leaving her almost all his property. He took such a step for the sake of a new love - a woman named Joni (Joan) Smith, the wife of one of Ray's partners.
However, the new lover could not decide on a divorce for a long time, and Krok was not able to live alone, so he married another woman. And yet, in 1969, Ray Kroc married Joni Smith, divorcing his second wife.
In 1961, Kroc bought all rights to McDonald's from the McDonald brothers for $2.7 million. This had to be done because Dick and Mac were slowing down the development of the network. To give the money to the brothers, Ray Kroc's company had to borrow the required amount from the Bristol Group, and in return it was paid 0.5% of the gross revenue of all McDonald's restaurants. According to calculations, payments should have ended in 1991, but by 1972 they managed to fully pay off this loan.
In the early 60s, the University of Hamburger Science was founded in Illinois, where students were taught all the intricacies of working and managing McDonald's restaurants.
For his 70th birthday, Kroc donated $7.5 million to St. Jude Children's Hospital.
In 1983, McDonald's gross sales reached $9 billion a day, and in December of the same year, Esquire magazine included Ray Kroc among the 50 people who had the greatest impact. great influence on the American lifestyle.
Creator of the empire before last days took part in the business, although in recent years he moved in a wheelchair. Kroc died of a heart attack at the age of 82. At the time of his death, in 1984, his personal fortune was estimated at $0.5 billion. In 2016, the film “The Founder” was released, telling the story of how Ray Kroc built the McDonald’s empire.
The world's largest fast food restaurant chain began as a small barbecue bar in 1940 in San Bernardino, California. It was founded by brothers Richard and Maurice MacDonald and since then the network has grown so much that it now serves 68 million visitors daily in 119 countries. Well, the very first restaurant was called "McDonald's Famous Barbeque" and offered its visitors about forty types of fried meat. In this article we will not only tell you about the very first restaurant, but also about the history of one of the largest and most famous in the world fast food. In the photo below you can see exactly that one. original restaurant in its original form.
A key turnaround for the restaurant came in 1948, after the McDonald brothers realized that most of their profits came from selling hamburgers. Then they decided to take a bold and drastic step - they completely closed the restaurant and converted the interior space into a simple conveyor system for preparing hamburgers. The simple menu included just a few types of burgers, chips and orange juice. The following year, French fries and Coca Cola were added. This simplified menu, as well as a simple assembly-line cooking system, allowed them to sell hamburgers for 15 cents, which was half the price of other restaurants in the city.
In 1953, the brothers already provided licenses to open the McDonald's chain in neighboring cities. Three more fast food restaurants were opened in Phoenix, Arizona and Downey in California. The restaurant in Downey is one of the oldest surviving restaurants today. In 1945, the brothers brought in Ray Kroc, a salesman for milkshake machines, as they opened restaurants across the country. On April 15, 1955, McDonald's became a corporation. The company calls its first restaurant Original McDonald's, since it was from here that the corporation's phenomenal success story began. We also recently wrote about the Coca-Cola Museum, McDonald's constant partner almost since its founding. The McDonald's Museum is located in San Bernardino, where You can see a replica of the restaurant with original equipment, including Ray Kroc's multi-milkshake machines. Also shown here are various uniforms of restaurant employees during different periods of its operation. There is also a collection of vintage advertisements, photos and videos dedicated to the history of McDonalds. Pictured below is the 1950s. e years. Customers at McDonald's restaurant:
Photo from 1955, this is Ray Kroc's first restaurant in Des Plaines, Illinois:
Exterior of the first store in Des Plaines, Illinois:
McDonald's Des Plaines team:
Appearance the first fast food restaurant with its neon arches, 1955:
The site of the first McDonald's restaurant, San Bernardino, California:
McDonalds Museum in Des Plaines, Illinois:
The first ever McDrive, held in Sierra Vista, Arizona:
Fred Turner and Ray Kroc consider a future restaurant project:
Here is the oldest McDonald's in Downey, California. The restaurant has remained virtually unchanged since it opened in 1953:
Finally, a few photos from the McDonalds Museum: 
Not long ago, the film “The Founder” was released about Ray Kroc, the creator of the McDonald’s empire. This is the most popular fast food chain in the world. Ray is accused of trying to erase the real founders of McDonald's from history, because the giant actually has not one, not two, but three fathers.
“Nothing in the world can replace persistence. No talent. Neither education. The world is full of educated homeless people. Perseverance and determination are almighty,” is the life motto of Ray Kroc, thanks to which the McDonald’s brand is known in almost any geographical latitude: both in Des Plaines in the USA, where the businessman launched his first restaurant, and in Lesotho in Africa.
Before Ray Kroc, along with Albert Einstein and Mahatma Gandhi, was included in Time magazine's list of the 100 most important people of the 20th century and before a film was made about him, the American's perseverance and determination were repeatedly tested by fate.
Ray was the son of immigrants who sold mixers. No one even thought that he would remain forever on the pages of history. This continued until he was 52 years old.
One day he learned that a small restaurant in San Bernardino, California, had ordered as many as eight mixers. “What restaurant makes 40 cocktails at once?” Ray wondered. It was 1954, when the paths of Ray Kroc and the McDonald brothers, the authors of the idea and founders of the McDonald's restaurant, crossed paths.
They were also descendants of immigrants and always worked in tandem. The brothers' business projects ended in fiasco one after another, and they decided to focus on the restaurant industry. In 1940 San Bernardino they started a small restaurant for travelers. The waitresses there brought orders for cars. Everything in the kitchen was mechanized, and each worker was responsible for only one stage of food preparation. They baked buns, put tomatoes and onions in them, and prepared meat for chops.
Soon the McDonald brothers' income reached $350 thousand a year. The next step in their expansion was new premises. In 1954, 9 new locations were opened and 21 franchise agreements were entered into. But because of this, the brand lost quality. It was another fiasco.
However, at this moment Ray Kroc entered the scene. The mixer seller offered the brothers joint business and became their franchise agent. Kroc improved the system created by the brothers. Now each sandwich had to contain the same number of cucumber slices and onion rings, each piece had to be weighed to the nearest gram.
The brothers were reluctant to accept the businessman's ideas. Relations between the partners began to deteriorate, and in the end they became completely cold.
How much is the company worth today and how its shares grew
At the time of Kroc's death in 1984, McDonald's was a large chain with 7,500 branches in 31 countries and a company value of $8 billion. Maurice Macdonald died 10 years after the sale of the company, Richard - 27 years later. The brothers left behind $1.8 million.
Currently, McDonald's is a chain of more than 30 thousand restaurants in more than 100 countries. The company's value is estimated at $110 billion.
McDonald's shares are at record highs. Those who bought securities McDonald's last year, today they have become one-third richer. Within two years, the shares have already risen in price by 70 percent.
Analysts believe in the continued prosperity of the famous fast food chain. Already more than $154 must be paid for one share listed on the New York Stock Exchange.
Processes in the company will be constantly automated: already now, when placing orders, people are being replaced by machines. Introduces the ability to order goods using mobile phone. The financial benefits of these solutions will already be visible in the coming years.
Real owners of the company
The company is public, so it does not have a sole owner. Almost 100% of its shares are in free float. 85% of all restaurants are owned by 5,000 independent entrepreneurs around the world.
Stephen Easterbook - new CEO McDonald's, who came to this post in 2015. He must keep the restaurant chain out of trouble, he announced the company's recovery plan. The main problem of the network is the fashion for healthy eating and active lifestyles are helping consumers turn away from fast food. The company's annual net profit is $4.55 billion.
How to buy McDonald's shares and become a co-owner of the company
No bank will provide stability in the face of inflation and devaluation of gold reserves, and the shares of the largest, stable company in the long term give more high income from dividends than they offer interest on deposits. Having a piece of property in a good company can feel as confident as holding money on a term deposit.
Today it is not a big problem to buy McDonald's shares. In Russia you can buy them using a regular broker.
The second option is to gain access and buy shares there. The advantage of this option will be a 13% tax on dividends, while in St. Petersburg, due to legal issues, you will have to pay 30%.
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Let's start with correct spelling and pronunciation of the company name. In Russia, the McDonald's trademark is used without a soft sign. This can be easily checked if you go to the official website of the company in Russia. For example, in Belarus McDonald's is officially spelled with a soft sign.
Ray Kroc is the man who founded McDonald's. At the moment when the fate of the future food giant was being decided, its founder was 52 years old, and his health was no longer good.
Raymond Kroc himself did not invent anything, except perhaps the future concept of the McDonald's franchise company. All the cooking standards and technologies used by McDonald's establishments were invented by two brothers, Maurice (Mac) and Richard (Dick) McDonald. But the company's success is increasingly associated with the name Ray Kroc. How did this happen?
Ray Kroc: childhood and youth
The future founder of the famous corporation was born on October 5, 1902 in the suburbs of Chicago (Illinois). Louis Kroc is the head of the family and part-time Ray's father, from the age of 12 he worked in a company that specialized in money transfers. Rose Kroc, the mother of the future entrepreneur, was a housewife. In addition to Ray, the family had two more children - sister Lauren and brother Robert.
Louis Kroc was a passionate baseball fan, and he especially closely followed the Chicago Tigers. He also infected his eldest son with this hobby; later, at the peak of his success, Ray would buy the famous San Diego Padres baseball club.
The Krokov family did not have huge funds. To supplement the family budget, her mother often gave piano lessons (she also taught Ray this skill, which later helped him find extra work).
Part homework In the absence of the mother, she fell on the eldest son, mostly cleaning. My grandmother also helped with the housework. It is known that she carefully monitored the order and cleanliness of the house, inheriting this quality later Ray would set a high standard for cleanliness among diners.
Interesting fact: after washing the floors, my grandmother covered them with newspapers so that they were always clean. Newspapers lay on the floor until the next cleaning.
Louis Kroc tried to give his children a complete education. Ray was not keen on studying. Often he would just lie on the bed, thinking. He later explained it this way:
Competitors can steal my plans, but they will never be able to read my thoughts. If so, I will always be several miles ahead of them.
First job
WITH junior classes he was attracted to trade. Sometimes, instead of studying, he helped his uncle sell carbonated drinks.
In high school, Ray Kroc and his friends rented a cubicle for $25. There they sell sheet music and musical instruments. Ray entertained customers by playing the piano and singing his own songs. But sales were very bad, because almost no one knew about the existence of the store. The idea soon failed and they had to close.
Ray was known to be an excellent speaker, which contributed to his future career. After all, this quality mainly helped convince the intractable McDonald brothers to sign the contract, as well as future franchisees (people who bought the rights to use trademark McDonald's). Oratorical qualities began to form and develop precisely in childhood, when the boy worked in trade.
How the founder of McDonald's started: first successes
In 1917, by deception, having cheated himself for several years, he went to war, where he subsequently became the driver of a Red Cross ambulance.
Fun fact: During World War I Kroc served in the same regiment with Walt Disney.
At the end of the war, Croc returns to Chicago. Yielding to the persuasion of his parents, despite his wishes, he continues his studies. But this imposed hobby does not last long, after a semester he quits classes and becomes a street vendor.
At that time (in the early 20s), the Krok family moved to New York, which was a real blow for Ray, because he already had a relationship with a girl, Ethel Fleming, with whom he was going to get married. But soon the family returned to their homeland. The parents of his beloved set conditions according to which Ray needed to find stable work. This is how the “Fast Food King” begins his career at Lily Cup, selling paper cups. In 1922, the young people got married, and in 1924 their daughter Marilyn was born.
To feed his wife and daughter, Ray had to work harder. During the day he sold paper cups and in the evening he played the piano. Later, he was even recognized as the company's best dealer and received a promotion.
In 1930, Ray's father died of a cerebral hemorrhage. In those years, the stock market collapsed - all of Louis Kroc's assets became worthless, a blow he could not survive.
Implementation of mixers
In the late 30s, engineer Prince invents a mixer that could simultaneously prepare 5 cocktails. Kroc decides to found a company selling mixers, leaving his previous job and losing permanent income. His wife did not support his initiative, and the relationship became cold. But Ray Kroc's rule is:
If you don't like to take risks, you shouldn't get into business.
In 1939, he registered his company selling mixers, Malt-A-Mixer. His company had two employees: a secretary (June Martino), who later became a co-owner of McDonald's and the first woman allowed to trade on the New York stock exchange, and Ray Kroc himself. He traveled around the country selling mixers.
The founders of McDonald's (Dick and Mac McDonald) began their work with an ordinary cafe. It was located in Arcadia, a city in California. Since this city is not crowded, the brothers decided to move to San Bernardino. But there was no money for a new building. A brilliant idea was come up with, the brothers decided to move the building from Arcadia to San Bernardino. But along the way a problem arose - a bridge over the road. And here, too, the brothers showed ingenuity, deciding to cut the building in half.
In the first half of the 20th century, establishments called drive-ins were popular in America. They were designed to serve customers who remained in the vehicle.
Dick and Mac decided to follow new trends, namely, they opened a cafe for drivers, such as a drive-in. In the new establishment, everything was arranged according to the latest trends: 27 items on the menu, waitresses in uniform brought the order to the machine. The cafe became wildly popular, but soon sales began to fall. There were several problems:
- hooligans on motorcycles scaring away other visitors;
- confusion in orders;
- extra expenses on wages;
- expenses for replacing dishes (in establishments of this type there was often a problem).
The brothers noticed that the lion's share of profits, 87 percent, came from three items: hamburgers, fries, and soda. It was decided to revise the menu and remove a dozen unnecessary items. Continuing to eliminate the shortcomings of the established establishment, the founders of McDonald's:
- replaced regular dishes with paper ones;
- they removed the waitresses, thereby completely moving away from the idea of a drive-in, now customers had to approach the cash register themselves;
- cigarette machines were removed (reducing the number of unwanted guests);
- distributed food preparation functions among kitchen workers.
The key point in creating a snack bar
But McDonald's didn't stop there, they wanted to reduce the waiting time from 30 minutes to 30 seconds. To do this, it was necessary to close the profit-generating cafe and redevelop the building. Dick and Mac were tennis fans, so they had their own court, with the help of which the redevelopment was carried out. It showed a floor plan of the premises, taking into account all the parameters and zones (preparing and assembling hamburgers, side dishes, etc.)
Later, employees of the establishment were invited to the tennis court. They were told to pretend they were in the building cooking. As a result of this imitation, the kitchen was redrawn several times while work and busy place were not fully optimized (this lasted about 6 hours).
This plan was implemented. Not without difficulties, but after a while McDonald's won the hearts of customers, gaining everything great popularity in your town.
The owners of McDonald's easily revealed the secrets of their restaurant to anyone they met who asked them about it. And if anyone was surprised, the brothers shrugged their shoulders: “Our restaurant has transparent walls. Naturally, their idea was stolen more than once, but no one was able to repeat the success.
Ray Kroc meets the McDonald brothers
One fine day he met the McDonald brothers. At a time when the sale of mixers was declining, someone ordered 8 pieces at once. He was very surprised, because if each mixer simultaneously prepared 5 cocktails, who needed to prepare 40 cocktails at the same time? Ray thought it was a mistake, but the order was confirmed. It was after this that he decided to go to the city of San Bernardino, from where the order was placed marked McDonald's.
When he arrived, he saw a huge line for 15-cent hamburgers. He noticed the unusually fast service system. The same system, invented by the brothers, still exists in all the restaurants of the chain. Despite the huge number of people, the service was efficient and fast.
Another feature of their establishment was that customers themselves approached the cashiers and ordered what they needed. This is how a partial self-service system was created. There were no flies or garbage on the premises. The brothers cleaned it themselves so as not to spend money on a cleaner.
Having learned that this was the same supplier of mixers, the MacDonalds invited him into the kitchen. Ray saw an open kitchen with a conveyor belt where almost every item on the menu was prepared. The small number of titles also surprised him. But everything was very thoughtful and cost much less than in similar restaurants. All dishes were paper and disposable, which was also financially beneficial.
Ray realized: now or never. “I was 52 years old. I had diabetes and arthritis. My gallbladder was removed and most of thyroid gland. But I believed that I could change a lot in my life,” he recalled.
Start of cooperation
Kroc suggested they start selling the franchise. But Dick and Mac were not incredibly happy with this idea, since they had already tried to start activities in this direction, but it had failed. 5 restaurants were opened as franchises, but the difficulty was in controlling the quality of food and cleanliness of the establishment, and an inconsistent menu (at that time, entrepreneurs thought that if you purchase a franchise, you have the right to do whatever you want with it, despite the contract).
He offered himself to them as an agent for a franchise company. Not immediately, but they agreed to sell him the right to distribute the franchise, worth 15 thousand dollars for 10 years. But he didn't have that kind of money.
Infected by the brothers' idea, the future founder of McDonald's tried to borrow money from the bank. However, he was denied a loan. He took a rather desperate step - he mortgaged the house and insurance. An agreement was signed with Mac and Dick, according to which Kroc could sell McDonald's franchises while receiving a 1.9% commission, of which 0.5% was intended for the brothers.
After this, the McDonald's empire was created, and Kroc himself earned about $600 million with more than 30 thousand restaurants around the world. However, he is known not so much as a brilliant manager, but as a person who changed the approach to mass nutrition.
First sales of McDonald's franchise
A little theory on the topic of franchising relations.
- Franchising is a way of organizing business activities in which the franchisee, for a certain fee, receives the right (license) to use a trademark and its technology.
- A franchisor is an owner company that transfers the right (license) to use a trademark and its technologies.
- A franchisee is a person or company that acquires the right (license) to use a trademark and its technologies.
- A lump sum fee is a one-time starting payment to the franchisee in the form of a fixed amount specified in the agreement. The 15 thousand dollars that Kroc paid was a lump sum contribution.
- Royalty is a regular payment for using a brand. Royalty in our history is 1.9 percent of franchisee revenue.
And so, having believed in this project and mortgaged his house, Ray Kroc went on a tour across the country with the proposal he had developed and the name McDonald’s. The existing franchising system has existed for quite a long time in the United States, since the arrival of the Zinger company (production of sewing machines). Ray Kroc just added a couple of his touches.
Franchise sales were carried out as follows: there should be only one restaurant per city. Ray Kroc set a strict rule that the license was given to one person per restaurant for a period of 20 years. The cost of the license reached $950 (a lump sum fee), and franchisees had to pay 1.9% (royalty) of the restaurant's revenue (1.4% to themselves, the remaining 0.5% to McDonald).
Everyone who purchased a license had to comply high requirements companies both in terms of quality and regarding service and logistics of goods.
The rules and strict control he established did not allow the franchisees to deviate from the original agreements. To those who met all the standards, Ray sold the rights to open other restaurants under the McDonald's brand. Violators lost their only restaurant upon expiration of the franchise agreement.
Difficulties encountered
Thanks to this approach, Kroc managed to sell only 18 franchises in the first year. Many were put off by the company’s requirements and the terms of holding a license. Those who did buy the rights were wealthy acquaintances of Kroc who had little interest in this business. Accordingly, there was a lot of confusion in the first McDonald's franchises, and dishes from other national cuisines appeared on the menu.
Naturally, this could not please Kroc, who wanted to introduce a single universal approach and didn’t know how to bring some sense into the future owners of the business and the bearers of its ideas.
Later, Ray began to more carefully select future partners for the role of owner of a McDonald's restaurant. The first chosen was Chicago journalist Sanford Agate, who had some savings and a desire to open his own business. Kroc, naturally, persuaded him to buy the franchise. It was decided to build the restaurant building from scratch. Kroc persuaded the owner to lease the land on which they were going to build the establishment for only 5 percent of the turnover of their future enterprise.
On the opening day, long lines lined up to get into the new cafe, and the proceeds could no longer fit into the cash register. The owner of the land was quite surprised when the restaurant began to bring in excess profits and regretted that he had sold it so cheaply. This was an excellent PR company, a poor journalist got out “from rags to riches.”
Gradually, the number of young and ambitious entrepreneurs under the McDonald’s brand became more and more.
How McDonald's Corporation was created
Raymond Kroc liked to say that he doesn't sell hamburgers, he sells businesses. He considered the strictest unification to be another key to success. The product and its appearance, color, taste must match the original in all states, the client should not feel the difference. As an agent for a McDonald's franchise company, he carefully monitored compliance with standards.
He had a special attitude towards cleanliness. Huge part provisions of the instructions for franchisees were devoted to cleaning. For example, windows need to be washed daily, refrigeration equipment and ventilation grilles - once every two days, ceilings - every week.
Kroc gathered a team of professionals around him; he was able to spot talent and attract them to work with him. An example is his secretary June Martino, who eventually becomes a co-owner of McDonald's and the first woman allowed to trade on the New York stock exchange.
Fred Turner also serves as an excellent example of Kroc's foresight, starting out as a simple kitchen worker, he would rise to become the president of the corporation and chairman of the board of directors. Harry Sonneborn, whom they met by chance at the bank, became the company's chief financier and later became the first president and CEO of the McDonald's Corporation.
McDonald's System, Inc.
In 1955, Kroc, without the consent of the McDonald brothers, registered the company McDonald's System, Inc (renamed McDonald's Corporation in 1960). She was also involved in distributing franchises and leasing land.
Sonneborn helped with the registration of the company. He also came up with a brilliant idea for subletting, which allowed him to take control of the real estate industry and freed Kroc’s hands. The company bought or rented land or buildings for a fixed amount, then subleased them to franchisees, receiving a certain percentage of sales.
Disagreement between Kroc and the McDonald brothers
Raymond Kroc was constantly looking for some improvement, additional income or an opportunity to reduce expenses. But according to the contract, Kroc had no right to change even the slightest detail of the restaurant or menu without their written consent. And they never agreed to anything.
An example is the Pepsi-Cola company logo. Ray suggested placing the logo of this company at the bottom of the menu, banners, leaflets in order to receive additional income. But Dick and Mac refused, citing the fact that McDonald's was created as a family company, advertising within it would be unnecessary.
Another interesting proposal was an innovation in the preparation of cocktails. Milkshakes were made from ice cream, the storage of which significantly increased the figure on the electricity bill. He suggested using soluble powders instead of milk and ice cream, which would significantly reduce the cost of raw materials and storage, and would also reduce the preparation time. But the brothers also refused, saying that milkshakes without ice cream were not needed.
After regularly refusing offers to change, Kroc fortunately met Harry Sonneborn, whom I mentioned above. He proposed purchasing land plots, turning them over and issuing them for lease to franchisees, who, according to the terms of the agreement, can rent the plots only from the agent of the franchise company, that is, only from Raymond. Thus, several goals could be achieved at once:
- Get a constant direct stream of income, money will start coming in even before laying the foundation.
- Get more capital for expansion, which can be used to purchase new lands in the future.
- Gaining full control over all franchisees
Sonneborn found investors to realize these goals.
Sale of the company
Raymond later forces the MacDonalds to sell the company. They offered a price of $2.7 million, which was clearly an inflated price considering the current state of the company, and 1% of the company's profits in perpetuity. And also in the conditions it was said that the brothers would receive a restaurant in San Bernardino as a gift, albeit under a different name. The contract did not stipulate conditions regarding the percentage of profits in order to avoid financial delays. The percentage was agreed upon through a handshake and Kroc's promise, which he, of course, did not keep.
There were 228 restaurants across the country; they earned 75 million the previous year, but the net profit of Kroc's company was only 77 thousand dollars with debts of five and a half million. There was no required amount to purchase the brand, and banks refused to lend, not considering the chain of cheap restaurants seriously.
Accountant Richard Boylan helped put this deal through. He came up with the idea of including in the company’s “assets” land and buildings that did not belong to them, but which they leased from landowners and gave to their franchisees. And in “income” - the projected increase in real estate prices. Thus, McDonald's income, at least on paper, quadrupled overnight.
Later, Harry Sonneborn again finds creditors. To give the money to the brothers, Ray Kroc's company had to borrow the required amount from the Bristol Group, and in return it was paid 0.5% of the gross revenue of all McDonald's restaurants. According to calculations, payments should have ended in 1991, but by 1972 they managed to fully pay off this loan.
After the deal went through, Raymond bought the building next to the brothers' restaurant, which was already called "Big M". By this time, McDonald's was already a serious brand. Within a few years (1968), the McDonald's restaurant in San Bernardino drove Big M out of business. Dick and Mac were forced to close it and sell the unique octagonal building for demolition.
The first university studying hamburger science was opened by Ray Kroc in 1961 in Illinois. There were 14 people in the very first class; now the number of graduates is 275 thousand worldwide. Students learn company standards and principles of managing McDonald's restaurants. Today there are 7 such operations in the world educational institutions, one of which is located in Moscow.
McDonald's is one of the largest real estate owners in the world. Every day, 1% of the world's population dine at McDonald's restaurants.
Kroc died of heart failure in a hospital in San Diego, California, on January 14, 1984, at the age of 81. $500 million is the amount that Kroc owned at the time of his death. In 1992, Ray Kroc's autobiography was published. In 2016, the film “The Founder” was released, telling about the difficult path to success of the main US restaurateur. He was named by Time magazine as one of the "100 Most Important People of the Century."
Remember, we read and argued about? Let's look at the very first establishment under this sign in the world.
The very first establishment of the brothers Richard and Maurice McDonald opened in 1940 in the Californian town of San Bernardino. It was an ordinary cafe for motorists. It brought them about $200,000 a year, but Richard and Maurice were constantly looking for ways to improve it. The very first restaurant was called “McDonald’s Famous Barbeque” and offered its visitors about forty types of fried meat.
In the photo above you can see exactly the original restaurant in its original form.
When in 1948 the brothers realized that their main income came from selling hamburgers, a brilliant idea came to their minds. It was a risky step, but they decided to do it and converted the restaurant's interior into a hamburger production line. The menu also changed, now it included several types of hamburgers, orange juice and chips, and a year later the menu was replenished with French fries and, beloved by all of America, Coca-Cola. A limited menu and fast conveyor service allowed the price of hamburgers to be reduced to 15 cents, which was much lower than what other establishments in the city offered. The sandwiches sold out with a bang!
They were the first in the world to introduce a completely new fast food concept based on quick service, low prices and high sales volume. They introduced self-service in the hall and remodeled the kitchen, changing equipment with the expectation of mass production and greater speed of preparation of portions. This sharply reduced the prices of hamburgers, which formed the basis of their range.
Word of their success quickly spread, and after an article about their restaurant was published in American Restaurant Magazine in 1952, they began receiving 300 inquiries a month from all over the country. Their first licensee was Neil Fox, and the brothers decided that his drive-in restaurant in Phoenix, Arizona, would be a prototype for the chain they wanted to create. The building, clad in red and white tiles, with a sloped roof and golden arches on the sides, became the model for the first wave of McDonald's restaurants to appear in the country, and a permanent symbol of the industry.
Crawling around their tennis court, the McDonald brothers chalked out an assembly line-style kitchen design that was twice the size of their first restaurant's kitchen. By studying the movement of workers during the cooking process, they were able to arrange equipment most efficiently. The rain washed away the chalk, and the brothers had to redo everything again, improving the design. They could not have dreamed of such success for their business in San Bernardino, but the potential of the franchising concept, of which they were pioneers, was far from being fully exploited.
For just a thousand dollars, licensees received the name "McDonald's", a fundamental description of the high-speed service system, and could, within one to two weeks, use the services of Art Bender, the brothers' first employee at the counter at the new restaurant, who helped the licensees get started. But in 1954, a traveling salesman selling milkshake machines, Ray Kroc, saw with his own eyes the McDonald brothers restaurant. The quick service restaurant industry was ready to take off.
In 1955, the McDonald brothers submitted licenses that would allow them to open a chain of fast food restaurants in neighboring cities. The list of cities where it planned to open branches included Phoenix, Arizona and Downey. Downey is still home to one of the very first restaurants. When it came to opening a chain of restaurants across America, the brothers took on Ray Kroc, who sold machines that made milkshakes, as partners. McDonald's became a corporation in April 1955. The first restaurant, which was already opened by McDonald's, was called Original McDonald's, and it was from here that the story of success and popularity of the world-famous chain began. Coca-Cola has been a partner of McDonald's, one might say, since its founding.
Exterior of the first store in Des Plaines, Illinois.
Ray Kroc was 52 years old. At this age, many people are thinking about retirement. And Kroc founded the company that became the McDonald's we know today. Kroc, who dropped out of school at 15 to work as a Red Cross ambulance driver during World War I, was a dreamer...a traveling salesman who was constantly looking for a final product to sell. He started out selling paper cups to street vendors in Chicago, dabbled in real estate in Florida, and finally built a nice business as the exclusive distributor of Multimixers. It was the Multimixers that first brought him to the McDonald Brothers hamburger restaurant in San Bernardino, California. After all, if he could discover the secret of how they were able to sell 20,000 cocktails a month, how many more cars could he sell them? But when Kroc showed up at the brothers' restaurant one morning in 1954 and saw a fast-moving line of customers buying whole bags of burgers and fries, he had one single thought: “This system will work everywhere. Everywhere!"
The McDonald brothers did not want to personally oversee the expansion of their concept throughout the country, so Ray Kroc became their exclusive franchising agent. The great traveling salesman had found his final product. On March 2, 1955, Kroc founded a new franchise company called McDonald's System, Inc. On April 15, 1955, his McDonald's restaurant opened in Des Plaines, Illinois, with the help of Art Bender, who provided diners with the first McDonald Brothers hamburger and now Ray Kroc's first McDonald's hamburger. Bender then opened Kroc's first licensed McDonald's restaurant in Fresno, California, and retired as the owner of seven restaurants.
Photo from 1955, this is Ray Kroc's first restaurant in Des Plaines, Illinois.
Soon after their new restaurant opened, it became obvious that they had hit the nail on the head and that it was exactly what the Americans wanted. The restaurant's name quickly spread among drivers, and its red-and-white tiled building with a sloped roof and golden arches on the sides began to attract more and more customers.
But Kroc knew that to continue to grow, he needed to buy the business from the McDonald brothers to remove the contractual restrictions under which he operated. Despite successful work restaurants, the net profit of Kroc's company in 1960 was only $77,000, and long-term debts were $5.7 million. The brothers asked for $2.7 million in cash, with $700,000 going to taxes, leaving them with $1 million each. A reasonable price for the time, the brothers thought, for inventing the fast food industry. In 1961, Kroc managed to obtain a loan against the company's real estate. Although it ultimately cost him $14 million to pay off the loan, he bought control over his growing system.
McDonald's team in Des Plaines.
That same year, in the basement of a restaurant in Elk Grove Village, Illinois, he opened Hamburger University, a training class for new licensees and restaurant managers, which grew into an international training center for training managers senior management, using advanced teaching methods.
Milestones of growth in the United States were: turnover, number of restaurants, number of hamburgers sold, and the establishment of standards of quality, service culture, cleanliness and availability (CAC&D) that were previously unknown in the fast food industry. By 1963 we were selling one million hamburgers a day, Ray Kroc sold the billionth hamburger to Art Linkletter during a television show.
The first national meeting of restaurant licensees was held in Hollywood, Florida in 1965 to commemorate the chain's tenth anniversary. And in the same year, McDonald's became a joint stock company, releasing its shares to open sale priced at $22.50. Within weeks, stock prices soared to $49 per share.
For Ray Kroc, years without a paycheck paid off. The first shares he sold were worth $3 million, and the remaining shares he held were worth $32 million. Even June Martino, Kroc's longtime partner and secretary at Multimixer, shared in his success, selling $300,000 worth of stock and keeping an additional $5 million in stock. A year later, on July 5, 1966, McDonald's was listed on the New York Stock Exchange, a major achievement for the hamburger chain. In 1967, the price of a hamburger at McDonald's increased from 15 to 18 cents, the first increase since the McDonald brothers set the price at 15 cents two decades ago. And the next year, the thousandth restaurant opened in Des Plaines, Illinois, not far from Kroc's first restaurant.
Ray Kroc retained the principles laid down by the McDonald brothers: a limited but high-quality menu, an assembly-line portion production system and fast and friendly service, adding to this highest standards cleanliness. The quality of food, accessibility, service culture and cleanliness to this day remain the main principles of the McDonald's fast food restaurant chain, which have won success all over the world.
By 1970, nearly 16,000 McDonald's restaurants in all 50 states and four countries outside the United States had sales of $587 million. That same year, a restaurant in Bloomington, Minnesota became the first to achieve $1 million in annual sales, and a restaurant in Waikiki, Hawaii, became the first to serve breakfast. The following year, the first McTown opened in Chula Vista, California. McDonald's crossed the billion-dollar sales mark in 1972 and split its shares for the fifth time, bringing the original 1965 stock of 100 shares to 1,836 shares.
In 1975, the first McAuto restaurant opened in Sierra Vista, Arizona. This new service system now accounts for almost half of the turnover of all McDonald's restaurants in the United States. That same year, the company's 3,076 restaurants operating in 20 countries generated $2.5 billion in sales. The following year, the 20 billionth hamburger was sold.
Exterior of the first fast food restaurant with its neon arches, 1955
In 1977, Ray Kroc was named senior chairman of McDonald's, and Fred Turner, a grill man at Kroc's first restaurant, was named chairman of the board. That same year, more than 1,000 restaurants had sales exceeding $1 million, and 11 restaurants exceeded the $2 million mark. By the time of the Silver Anniversary in 1980, 6,263 restaurants in 27 countries were generating sales of $6.2 billion and more than 35 billion hamburgers had been sold. On January 14, 1984, Ray Kroc died, fulfilling his McDonald's dreams. That same year, his company's sales exceeded $10 billion, 50 billion hamburgers were sold, and there were 8,300 restaurants in 36 countries. A McDonald's restaurant opened every 17 hours worldwide, and the average restaurant generated annual sales of $1,264,000. By 1990, trade turnover had increased to $18.7 billion, and the number of hamburgers sold exceeded 80 billion. 11,800 McDonald's restaurants operated in 54 countries.
And in 1990, the company's leadership changed for only the third time in its history: Fred Turner became Senior Chairman, passing the baton to Mike Quinlan, who was appointed Chairman and Senior executive director, who began working part-time at McDonald's in 1963 as a mail sorting clerk.
Fred Turner and Ray Kroc are considering a future restaurant project
As a testament to its systematic and consistent performance over many years, McDonald's has been the only company in the Standard & Poor 500 to report 100 consecutive quarters of year-over-year growth in revenue, earnings, and earnings per share since 1965. It's no surprise that Better Investing Magazine named McDonald's the most popular company and its common stock the most widely held... And Life magazine named Ray Kroc one of the 100 most important Americans of the 20th century.
The site of the first McDonald's restaurant, San Bernardino, California
Ray Kroc's dreams of growing the company in the United States were fully realized, but the story was just beginning. McDonald's began to conquer the world. While experts were surprised at the rapid development of the hamburger chain in the United States, our company was preparing another surprise for them in the form of expanding the system outside the United States.
The first restaurant outside the United States was in Canada on June 1, 1967, and the race was on. Today there are over 1,000 restaurants in Canada. When McDonald's Canada introduced pizza to its menu in 1992, they overnight became the largest retail chain selling this dish.
First ever McDrive held in Sierra Vista, Arizona
On April 29, 1988, an agreement was signed in Moscow on the creation of a joint venture between the Canadian company McDonald's Restaurants of Canada Limited and the General Administration catering Moscow City Executive Committee - "Moscow-McDonald's".
The authorized capital of the future joint venture was 14.952 million rubles.
It was planned that the total number of McDonald's catering establishments in Moscow would be increased to 20.
In 1988, Moscow newspapers reported that the first Moscow McDonald's would hire students and schoolchildren, most of them on a part-time basis. “Given the intensive work, the pay will be high - two to two and a half rubles per hour,” newspapers of those years wrote.
On May 3, 1989, construction began on the first McDonald's restaurant on Pushkinskaya Square in Moscow, and on January 31, 1990, it opened.
At dawn on January 31, 1990, over 5 thousand people gathered in front of the restaurant, waiting for the opening. On the first day of operation, the McDonald's restaurant on Pushkin Square served more than 30 thousand visitors, setting a world record for the first working day in the history of McDonald's. Previously, the world record belonged to a Budapest restaurant - 9 thousand 100 visitors
The first fast food establishment had 700-900 seats inside the building and another 200 in the summer outdoor area.
In 1990, a hamburger cost 1.5 rubles, and a Big Mac cost 3.75 rubles, with an average wages Soviet man 150 rubles. For comparison: a monthly bus pass cost 3 rubles.
The second and third restaurants of the chain opened in 1993 on Old Arbat and Gorky Street (now Tverskaya Street).
The first restaurant outside the capital was opened in St. Petersburg in 1996.
Also in 1996, McDonald's launched Russia's first concept of serving visitors in cars - MakAvto, which works on the principle of several windows, which allows you to order and receive products while in your car.
In 1992, the McComplex was opened for the production of semi-finished products for a chain of restaurants, producing about 70 million kilograms of products per year.
Today there are 218 McDonald's restaurants in Russia, which serve more than 600 thousand visitors daily.
In 1971, the first restaurants were also opened in Germany and Australia. Today there are over 600 restaurants in Germany, and about 635 in Australia. In France and England, the first restaurants appeared in the early 1970s; currently there are 625 enterprises in France, and more than 700 in England.
Here is the oldest McDonald's in Downey, California. The restaurant has remained virtually unchanged since it opened in 1953
Richard McDonald opens the first McDonald's Bar-B-Que in San Bernardino at the intersection of 14th and East streets, where it is still located.
The McDonald brothers decided to renovate their cafe and change the menu, which from now on contains only nine dishes. The main dish on the menu was a 15-cent hamburger, with which, for just 5 cents, visitors could get a huge glass of orange juice.
McDonald's introduces its famous French fries, which become a bestseller.
Ray Kroc visits McDonald's and becomes partners with Richard and Maurice (also known as Dick and Mac). Soon Rey is already an official franchise agent. He introduces a milkshake to the restaurant's menu.
A second McDonald's is opening in Des Plaines, Illinois, thanks in large part to Ray Kroc. On the day the restaurant opened, its revenue was $366.12. Over the next decade, more than 700 McDonald's will open.
23 years after the opening of the first restaurant, the 500th McDonald's opens in Toledo, Ohio.
In 1965, McDonald became a formal corporation by publicly selling its shares at $22.50 per share. The initial sale of shares took place on the 10th anniversary of the opening of the network.
1963
Ronald McDonald entered the business; the net profit of the McDonald's chain exceeded $1 million.
With the opening of the first McDonald's restaurants in Canada and Puerto Rico, McDonald's became an international chain. This process has continued continuously since then, ultimately leading to McDonald's branches being opened today in 118 different countries.
The famous Big Mac appears at McDonald's.
In addition to the lunch menu, McDonald's also offers breakfast, which includes sandwiches and an egg called McMuffin. The Egg McMuffin was invented by Herb Peterson, a McDonald's manager in Santa Barbara, California.
McDonald's is celebrating its 25th anniversary.
In an effort to please customers who care about their figure and health, fresh salads appeared on the McDonald's menu on May 15, 1987.
Opening of the first McDonald's in the USSR and Russia on Pushkinskaya Square in Moscow. At that time, it was the largest of all the restaurants in this chain, which broke the record of the McDonald's chain, serving 30 thousand visitors on the opening day.
McDonald's launches a website, McDonalds.com.
In 2005, McDonald celebrated its 50th anniversary of opening its first restaurant.
McDonald's introduced a snack (snack) to the menu, adding a sandwich to lunch.
As part of its competition with cafes and bistros, McDonald's is launching a line of lattes and cappuccinos in restaurants - McCafe, which also includes freshly squeezed fruit cocktails and Frappes.
McDonalds Museum in Des Plaines, Illinois
The museum of this king of fast food is located in San Bernardino, here you can see a mini-replica of the corporation's first restaurant with original equipment, which includes Ray Kroc cocktail machines. Very interesting exhibits are the uniforms of the employees, which were changed several times over the long years of operation of the network. And of course, there are a lot of old advertisements, photographs and a video library, from which you can trace the history of the development of the restaurant chain.
sources
http://mcdpopculture.blogspot.com
http://lifeglobe.net
http://kervansaraymarmaris.com
http://www.vmireinteresnogo.com
http://ria.ru
http://makdak2004.narod.ru/item4.html
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