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Ray Kroc
1902 - 1984

 


McDonald's begat an industry because a 52-year-old mixer salesman understood that we don't dine — we eat and run
By JACQUES PEPIN for Time Magazine
 

 

Among the army of burger flippers at work across America in the 1960s was a French chef putting his training to use at Howard Johnson's on Queens Boulevard in New York City. I worked for HoJo's from the summer of 1960 to the spring of 1970, doing my American apprenticeship, learning about mass production and marketing. The company had been started in 1925 in Massachusetts by Howard Deering Johnson, and by the mid-1960s its sales exceeded that of Burger King, Kentucky Fried Chicken and McDonald's combined. There would be more than 1,000 Howard Johnson restaurants and 500 motor lodges. Yet after Johnson's death in 1972, the company lost its raison d'etre. The restaurants became obsolete; the food quality deteriorated. You underestimate the clientele at your peril. The late restaurateur Joe Baum used to say, "There is no victory over a customer."

As the Howard Johnson Co. went to pieces, Ray Kroc's obsession with Quality, Service, Cleanliness and Value — the unwavering mission of McDonald's--was gathering momentum. Kroc was adroit and perceptive in identifying popular trends. He sensed that America was a nation of people who ate out, as opposed to the Old World tradition of eating at home. Yet he also knew that people here wanted something different. Instead of a structured, ritualistic restaurant with codes and routine, he gave them a simple, casual and identifiable restaurant with friendly service, low prices, no waiting and no reservations. The system eulogized the sandwich — no tableware to wash. One goes to McDonald's to eat, not to dine.

Kroc gave people what they wanted or, maybe, what he wanted. As he said, "The definition of salesmanship is the gentle art of letting the customer have it your way." He would remain the ultimate salesman, serving as a chairman of McDonald's Corp., the largest restaurant company in the world, from 1968 until his death in 1984.

In 1917, Ray Kroc was a brash 15-year-old who lied about his age to join the Red Cross as an ambulance driver. Sent to Connecticut for training, he never left for Europe because the war ended. So the teen had to find work, which he did, first as a piano player and then, in 1922, as a salesman for the Lily Tulip Cup Co.

Although he sold paper cups by day and played the piano for a radio station at night, Kroc had an ear better tuned to the rhythms of commerce. In the course of selling paper cups he encountered Earl Prince, who had invented a five-spindle multimixer and was buying Lily cups by the truckload. Fascinated by the speed and efficiency of the machine, Kroc obtained exclusive marketing rights from Prince. Indefatigable, for the next 17 years he crisscrossed the country peddling the mixer.

On his travels he picked up the beat of a remarkable restaurant in San Bernardino, Calif., owned by two brothers, Dick and Mac McDonald, who had ordered eight mixers and had them churning away all day. Kroc saw the restaurant in 1954 and was entranced by the effectiveness of the operation. It was a hamburger restaurant, though not of the drive-in variety popular at the time. People had to get out of their cars to be served. The brothers had produced a very limited menu, concentrating on just a few items: hamburgers, cheeseburgers, french fries, soft drinks and milk shakes, all at the lowest possible prices.

Kroc, ever the instigator, started thinking about building McDonald's stores all over the U.S. — each of them equipped with eight multimixers whirring away, spinning off a steady stream of cash. The following day he pitched the idea of opening several restaurants to the brothers. They asked, "Who could we get to open them for us?" Kroc was ready: "Well, what about me?"

The would-be Great War veteran would grow rich serving the children of World War II vets. His confidence in what he had seen was unshakable. As he noted later, "I was 52 years old. I had diabetes and incipient arthritis. I had lost my gall bladder and most of my thyroid gland in earlier campaigns, but I was convinced that the best was ahead of me." He was even more convinced than the McDonalds and eventually cajoled them into selling out to him in 1961 for a paltry $2.7 million.

He was now free to run the business his own way, but he never changed the fundamental format that had been devised by the brothers. Kroc added his own wrinkles, certainly. He was a demon for cleanliness. From the overall appearance, to the parking lot, to the kitchen floor, to the uniforms, cleanliness was foremost and essential. "If you have time to lean, you have time to clean," was one of his favourite axioms. He was dead on, of course. The first impression you get from a restaurant through the eyes and nose is often what determines whether you'll go back.

By 1963 more than 1 billion hamburgers had been sold, a statistic that was displayed on a neon sign in front of each restaurant. That same year, the 500th McDonald's restaurant opened and the famous clown, Ronald McDonald, made his debut. He soon became known to children throughout the country, and kids were critical in determining where the family ate. According to John Mariani in his remarkable book America Eats Out, "Within six years of airing his first national TV ad in 1965, the Ronald McDonald clown character was familiar to 96% of American children, far more than knew the name of the President of the United States." Being a baby-boom company, McDonald's has found maturity a bit difficult. Its food today is as consistent as ever. But Americans are different, much surer of their tastes today. They no longer need the security McDonald's provides. So the same assets that had made the restaurants so great started to turn against the company, especially after Kroc died in 1984. People looked at uniformity as boring, insipid and controlling, the Golden Arches as a symbol of junk-food pollution. Franchisees began to feel increasingly alienated from top management, especially in its aggressive expansion policies.

Ironically, no adjustments are needed outside the U.S. With restaurants in more than 114 countries, McDonald's still represents Americana. When I return to France, my niece's children, who are wild about what they call "Macdo," clamor to go there. It has a somewhat snobbish appeal for the young, who are enamoured of the American life-style.

Still, it's likely Ray Kroc would have moved on to something else if he had found a better idea. Even after McDonald's was well established, Kroc still tried, often with dismal results, to move forward with upscale hamburger restaurants, German-tavern restaurants, pie shops and even theme parks, like Disneyland. He always had a keen sense of the power of novelty and a strong belief in himself and his vision.

Like many of America's great entrepreneurs, Kroc was not a creator — convenience food already existed in many forms, from Howard Johnson's to White Castle — but he had the cunning ability to grasp a concept with all its complexities and implement it in the best possible way. And that's as American as a cheeseburger.
 


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Raymond Albert Kroc (1902-1984) was a salesman who set up the first franchise of the McDonald brothers' drive-in restaurant. He bought the golden arches symbol from them and built the McDonald's chain based on the concepts of a limited menu of controlled quality and uniformity combined with massive advertising.

Ray Kroc was born in Chicago, Illinois, on October 5, 1902, the son of relatively poor parents. He went to public schools in Oak Park, Illinois, a suburb of Chicago, but did not graduate, leaving school to serve as an ambulance driver during World War I, like Ernest Hemingway, also from Oak Park. After the war Kroc became a jazz pianist, playing with the Isham Jones and Harry Sosnick orchestras. Upon his marriage in 1922 he went to work for the Lily-Tulip Cup Company, but soon left to become musical director for one of Chicago's pioneer radio stations, WGES. There he played the piano, arranged the music, accompanied singers, and hired musicians. Kroc's wanderlust was not satisfied with this, and the real estate boom in Florida soon found him in Fort Lauderdale selling real estate. When the boom collapsed in 1926 Kroc was so broke that he had to play piano in a night club to send his wife and daughter back to Chicago by train. He later followed them in his dilapidated Model-T Ford.

Kroc thereupon returned to Lily-Tulip as a salesman, later becoming midwestern sales manager. In 1937 he came upon a new invention, a machine that could mix five milk shakes at one time, called the "multi-mixer." Kroc founded his own company to serve as exclusive distributor for the product in 1941. Many years later, in 1954, Kroc heard of a drive-in restaurant in San Bernardino, California, owned by Richard and Maurice D. McDonald, which was operating eight of his multi-mixers. Curious as to how they could possibly use so many machines in a small establishment, Kroc found the brothers were doing a remarkable business selling only hamburgers, french fries, and milk shakes. Kroc, from his years in the paper cup and milk shake business, recognized a potential gold mine and approached the brothers about starting a franchise operation based on their restaurant, selling hamburgers for 15 cents, fries for 10 cents, and shakes for 20 cents. After some negotiation the McDonald brothers agreed. Under the arrangement, they would receive one-half of one percent of the gross, Kroc would use the McDonald name and concept, pledged to retain high levels of quality, and would retain their symbol - the golden arches. Ray Kroc opened the first of the chain of McDonald's restaurants on April 15, 1955, in Des Plaines, Illinois.

Small by today's standards, this restaurant in Des Plaines (now the world's first "Hamburger Museum") was a little red and white tile affair where root beer was poured from a wooden barrel, potatoes were peeled in the restaurant, and there were local supplies of fresh hamburger meat. The symbol, now long forgotten, was Speedee, a hamburger-bun-faced creature. On that first day, Kroc's restaurant had sales of $366.12. By 1961 there were over 130 outlets, and in that year Kroc bought out the McDonald brothers for $2.7 million. From these humble beginnings emerged an empire which by 1984 had 8,300 restaurants in 34 countries with sales of more than $10 billion.

Ray Kroc revolutionized the restaurant industry in much the same way that Henry Ford transformed the automobile industry a generation earlier. Kroc's great contribution was to figure out how to mass-produce food uniformly in astounding quantities, and then to convince millions of Americans that they needed to buy this food. To accomplish the first objective, Kroc reduced the food business to a science. Nothing was left to chance in the logistics of the McDonald's operations, which were carefully researched by sophisticated methods. The precision of the operation can be appreciated when it is understood that each McDonald hamburger was made with a 1.6 ounce beef patty, not more than 18.9 percent fat. It is exactly .221 inches thick and 3.875 inches wide. All other aspects of the operation are equally rigidly controlled. Kroc also relentlessly stressed quality, banning from his hamburgers such filler materials as soybeans.

The other side of the McDonald's success story is franchising, marketing, and advertising. Three-quarters of McDonald's restaurants are run by franchise-holders. By 1985 each franchise cost about $250,000 and ran for 20 years, after which it reverted to the company. When choosing franchise-holders, Kroc always looked for someone good with people. As he said," … we'd rather get a salesman than an accountant or even a chef." The franchise owners were then intensely trained at McDonald's "Hamburger University" in Elk Grove, Illinois, where a training course led to a "Bachelor in Hamburgerology with a minor in french fries." The company also provided a lengthy manual that outlined every aspect of the operation, from how to make a milk shake to how to be responsive to the community. The capstone of the McDonald's operation, however, was advertising. Hundreds of millions of dollars were poured into advertising - to the point where the head of another fast-food company said in 1978 that consumers were "so preconditioned by McDonald's advertising blanket that the hamburger would taste good even if they left the meat out."

Despite its astounding success, and despite the fact that the company worked hard to project a charitable and community-oriented image, McDonald's came under attack on several fronts. A number of communities refused to allow its restaurants in their area, seeing it (as one commented) as a "symbol of the asphalt and chrome culture." The company was also criticized for its extensive use of part-time teenaged help, and especially for the $200,000 which Kroc donated to Richard Nixon's re-election campaign, since the administration soon after recommended amending the minimum wage law to provide for a "youth differential." This would have allowed employers to hire teenagers at 80 percent of the minimum wage. The architecture of the buildings and the nutritional content of the food was assailed, although nutritionist Jean Mayer said that as "a weekend treat, it is clean and fast."

In the mid-1970s Kroc turned his energy from hamburgers to baseball, buying the San Diego Padres. He had less success at this, however, and in 1979 gave up operating control of the team, saying with his typical crustiness, "there's a lot more future in hamburgers than in baseball. Baseball isn't baseball anymore." In the years before his death he and his second wife, Joan, set up foundations to aid alcoholics and established Ronald McDonald houses to help the families of children stricken with cancer.

Kroc cut a commanding figure, his thin hair brushed straight back, his custom blazers impeccable, the bulky rings on his fingers glinting as he ate his hamburgers with both hands. Aware of his abrasiveness, he once commented: "I guess to be an entrepreneur you have to have a large ego, enormous pride and an ability to inspire others to follow your lead." He died in San Diego on January 14, 1984.

 

 

 

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This web page was last updated on: 12 December, 2008