Ray Kroc. A High School Dropout, Struggling Salesman, To Building The McDonald's Empire.
This Is The Story.
Donald Trump once said if you’re going to do anything you might as well do it big. You don’t have to like the guy but that statement holds true for many things in life.
McDonald’s as we know it is a simple idea that started with two brothers in 1948. Then they met a guy who turned it into an empire. Today, McDonald’s operates in over 100 countries and over 37,000 stores. This is the story of McDonald’s and Ray Kroc.
Early Days
Raymond Albert Kroc was born on October 5, 1902. His parents, Rose Mary and Alois Kroc were Czech-Americans. Alois got lucky and made money in the 1920s, by speculating on land but lost it all at the end of the decade. Due to the massive stock market crash. According to McDonald’s website, Ray joined the Red Cross in 1917 as an ambulance driver. He and the famous Walt Disney allegedly lied about their age to get in. Ray moved on from the Red Cross. He became a real estate agent, a piano player, and then a salesman of paper cups and milkshake mixers.
Here’s something that you’ll notice if you have read my previous letters. No one makes it on their first try. The road to success is often paved with failures. But perseverance is your spare tire, it’s your extra container of gas. Never take on a journey without it.
Striking Gold
After years of trying his hand at different things, Ray struck gold. In 1954 Ray Kroc went to San Bernardino, California. He met two brothers, Maurice and Richard McDonald. They were operating a small hamburger store named Mcdonald’s Hamburger. Ray Kroc loved the brothers’ operation. They were delivering food to customers in less than 1 minute after taking orders. They were the true pioneers of fast food. Ray loved the concept and decided to pitch himself as the person who could make McDonald’s national. In 1955, he struck a deal with the brothers and got to work selling the franchise around the country. Ray also opened his first store. He soon found out that his original deal was not well thought out. The brothers were making money but Ray was struggling.
The Big M…Move That Is.
In the 1960s, a bunch of other fast food stores began popping up. KFC, Burger King, and others. Kroc knew he had to move faster and think even bigger.
Ray met Harry Sonneborn who was a smart businessman. Harry told Ray that the way for him to make money was not to operate the stores but to own the land they operated on. They incorporated a company by the name Mcdonald’s System Inc. The franchisees would then pay Ray a lease or a percentage of sales. Whichever was greater. This brilliant move allowed Kroc to become profitable and opened over 1000 stores.
He had a big vision for the Mcdonald’s brand but the McDonald brothers were not ok with a lot of Ray’s ideas. In 1961 he bought out the brothers for $2.7 million. He offered a price that would net each brother $1 million after fees and taxes. Ray Kroc thought that the original store operated by the brothers was a part of the deal but the brothers said no. Kroc felt tricked and decided to force them to change the name of the only store they had. The brothers changed their store's name to the Big M. But that wasn't enough. McDonald’s Hamburger was a much bigger and stronger brand. And because of that, the brothers failed.
Ray was serious about quality. He opened Hamburger University in Elk Grove Village, Illinois. Franchisees attended to learn the key methods and principles for running a successful McDonald's store. Today, over 200,000 owners and staff members have been trained at the university.
Kroc loved McDonald’s and worked hard to make it into the brand we know it as today. He was never a supporter of handouts or welfare programs by the government.
Many believe he cheated the brothers. To some, he's a hero, and to some, far from that.
Ray Kroc was married three times. he also had a daughter but she died in 1973 from diabetes and other complications. He co-authored the book Grinding It Out
The Kroc Foundation has done great work in education and healthcare. They have funded research about alcoholism, diabetes, and arthritis. They also provide free housing for parents whose child is receiving treatment at a nearby hospital.
Kroc had a stroke in 1980 and went to an alcohol rehabilitation center. He passed 4 years later of heart failure. His principles and systems are still present and are at the core of McDonald’s operation.
Quotes By Kroc
“Luck is the dividend of sweat. The more you sweat, the luckier you get.”
“The quality of a leader is reflected in the standards they set for themselves.”
“I was an overnight success all right, but thirty years is a long, long night.”
“Happiness is not a tangible thing, it’s a byproduct of achievement. Achievement must be made against the possibility of failure, against the risk of defeat. It is no achievement to walk a tightrope laid flat on the floor. Where there is no risk, there can be no pride in achievement and, consequently, no happiness. The only way we can advance is by going forward, individually and collectively, in the spirit of the pioneer. We must take the risks involved in our free enterprise system. This is the only way in the world to economic freedom. There is no other way.”
There’s a movie that covers this story. It’s titled the Founder.
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Thank you for reading. See you next week. God’s will.