Ray Kroc was responsible for taking a small neighborhood restaurant with eye-catching golden arches spelling the letter 'M' to a fast-food giant serving almost 1% of the population of the world every day. He stayed at the helm of the McDonald's Corporation for 30 years, made a fortune of $500 million and by the time he died in 1984, had opened more than 7000 restaurants, selling 50 billion burgers.
Ray Kroc was born on October 5, 1902, to Czech parents, his father worked for Western Union and his mother was a music teacher and they lived in the Oak Park area near the bustling metropolis of Chicago. The shadows of war and the Great Depression, that would plague the economy in the coming years, were still far off in the future and entrepreneurship was the buzzword for young Americans. It was the age of William Durant and Henry Ford, the Wright Brothers had just flown their first airship, lifting humanity off the ground. It should suffice to say that Ray Kroc was born in an age of nation builders.
Kroc was enterprising from the start, when he was fifteen years old he dropped out of school and lied about his age to land the job of an ambulance driver for the Red Cross. It was during his training that he met and befriended Walt Disney, whom he would contact some years later in a professional capacity. Kroc never saw service at the front-line, as the war ended before he could finish his training, however, seeing the high rate of fatalities for medical professionals during the Great War, it was probably for the better. His mother had taught him to play the piano but he wasn't a jazz musician for long, turning soon to sales and becoming a paper-cup salesman for the Lily-Tulip Cup Corporation, known today as the Solo Paper Cup Company. One of his customers was Earl Prince, the inventor of the Multimixer, a machine that could mix five milkshakes at once. Ray Kroc convinced Prince to give him exclusive marketing rights for the machine and sold it all over the country for the next 17 years.
It was in 1940 that the McDonald Brothers, Richard and Maurice, opened the first McDonald's in San Bernardino, California. Initially, it was a small set-up, without the trademark signs and arches that the franchise would later become famous for, however, the brothers were enthusiastic about making a million dollars before they turned 50. They had established a production system for their burgers, it was called the Speedee Service System and employed a process similar to an industrial assembly line, vastly increasing the efficiency of the restaurant. In 1954, Ray Kroc was still selling Prince Castle Multimixer all over the country, and though the brand was facing stiff competition from Hamilton Beach mixers, he had received a huge order for 8 Multimixers from a restaurant in San Bernardino, California. He visited the McDonald's restaurant and spoke to the brothers, convincing them to take him on as a supplier for their future franchises. It wasn't long before Kroc's entrepreneurial spirit got the better of him and he began to lose patience with the McDonald brothers for their slow approach to expansion, he'd realized the franchise had immense potential and with its commitment to quality and quick service could easily go global. He joined the business as a franchise agent and opened the first McDonald's (the first of the present McDonald's Corporation, ninth overall) in Des Plaines, Illinois, on April 15, 1955. It was not all golden arches and easy smiles for Kroc as he was suffering from diabetes and arthritis, and had to undergo operations to remove his gall bladder and thyroid gland.
Ray Kroc was 59 years old, when in a splendid display of business acuity, he convinced the McDonald Brothers to sell him the business and bought them out for a mere $2.7 million. The brothers got their millions and Ray Kroc took control of McDonald's. Their parting was not wholly amicable as the brothers raised objections over Kroc's attempts to take over the original unit, which they had decided to turn over to the employees. Kroc, on his part denied the brothers any royalty and later set up a McDonald's near the original restaurant and forced it to down shutters. There is also a story of how Kroc approached his war-time friend, Walt Disney, with a proposal to integrate the McDonald's franchise into the Disney World projects that Disney was contemplating, however, the proposal was turned down. Kroc then initiated a standardization program, formulating strict rules and clear guidelines for franchises with regard to food preparation, customer service and the ambiance of the outlets. He advocated the use of soybean in the burger patties to reduce costs and marked exact portion sizes and recipe ingredients, making sure every McDonald's product tasted the same.
While running McDonald's, Kroc realized that a big chunk of the profits would come from the land on which the restaurants are established. In 1956 Ray Kroc set up the Franchise Realty Corporation, which bought land and leased it out to franchises. Post 1961, he began recruiting franchises at a feverish pace. The revenues that the company received from the franchises made it easier for Kroc to raise capital in the financial markets. Kroc often said that McDonald's was a three-legged tool, one leg was the franchise, another the company itself and the third was their suppliers. The stool was only as strong as its legs, and they needed to take care of all three. He gave franchises the freedom to innovate and bring new ideas to the table and many iconic menu items such as the Filet-O-Fish and the Egg McMuffin were created by the franchises, even their mascot Ronald McDonald was created by the famous American actor and comedian Willard Scott. He replaced the original Speedee, a chef with a hamburger head, and has become one of the most recognizable mascots of any corporate entity in the world. In 1961 Ray Kroc set up a training program at a restaurant in Elk Grove Village, Illinois, a place where franchise owners could learn the scientific techniques of making the perfect hamburger and running a successful outlet, a University for Hamburgers. With the company going public in 1965, Kroc looked toward foreign shores and McDonald's embarked on a mission of globalization, what many critics today call the McDonaldization of the world.
Today a McDonald's can be found in 119 countries and it serves more than 68 million customers daily. With over 34,000 restaurants worldwide, McDonald's often tailor-makes its offerings to suit regional preferences. In order to make the chain's name more easily pronounceable for Japanese consumers, it was changed to Makudonarudo. In India and in the Middle East, pork is not served with regard to religious sentiments. In Ireland the promotions proclaimed, Our name may be American, but we're all Irish.
Many companies who operate in the service industry have learned several best-practices from McDonald's system. Ray Kroc was right when said, The organization cannot trust the individual; the individual must trust the organization. Non-conformists did not find any place in his plans. He constantly harped on the need for labor specialization and achieving the company's value proposition.
After handing over the operations to Fred Turner in 1968, Kroc began to take a much broader view of the organization he built from the ground-up. In 1977, Ray Kroc became the Senior Chairman of McDonald's but was firmly entrenched in the monitoring of business and the commitment to quality and service which the company had some to stand for. He would often make surprise visits to new franchises, and kept an eye on the McDonald's opposite his office, calling the manager to remind him to clean his lot and switch on the lights. In 1974, Ray Kroc became a hero for reasons completely unrelated to business. He purchased the San Diego Padres baseball team for about $12 million and prevented them from moving to Washington, D.C. Kroc also established the Ronald McDonald House Charities, an organization that has built over 322 Ronald McDonald homes in 52 countries, for children who have to travel to receive treatment in various parts of the world. Kroc also donated to the Dartmouth Medical School and was a major contributor to Richard Nixon's re-election campaign in 1972.
Ray Kroc had suffered a stroke in 1978 and his health steadily deteriorated throughout the latter part of the decade until he was confined to a wheelchair in the early 80s. He died on January 14, 1984 at the age of 81. The Ray Kroc Award was established by the McDonald's Corporation in 1999, and is an annual award given to the top 1% of McDonald's managers from their 14,000 restaurants in the United States.
The legacy of Ray Kroc, a somewhat controversial one against the backdrop of a health-conscious 21st century, lives on in the multinational McDonald's Corporation, a behemoth of capitalism that has an economy bigger than that of some third-world nations. Although it has received flak in recent times for its aggressive marketing practices and the health-risks that its products pose to children and adults alike, the fact remains the ubiquitous golden arches by the side of a long, lonely stretch of highway, bring a smile to many a traveler's face. None of this would be possible without the marketing genius of Ray Kroc.