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Ray Kroc

creator of the McDonald's franchise

Ray Kroc

Ray Arthur Kroc was born in Oak Park, Illinois, on October 5, 1902. In 1917, he lied to the Red Cross about his age in hopes of becoming an ambulance driver during World War I, but the war ended before he could realize his dream. After the war he initially took a job as a piano player, but it was as a salesman that Kroc would begin his climb to fame.

In 1922, Kroc became a salesman for the Lily Tulip Cup Company. One of Kroc's best customers was Earl Prince, who had invented a milk-shake machine that could make five shakes at a time. Kroc was able to obtain exclusive marketing rights to the Prince Castle Multimixer, and he spent the next 17 years crisscrossing the country peddling the device.

As Kroc visited restaurant after restaurant on his sales rounds, he saw first hand which restaurants seemed to have the right formulas for success and which seemed doomed to failure. And, never one to keep his opinions to himself, he was always prepared to offer advice to restaurant owners as to how they could improve their business. In 1954, he was presented with an opportunity to put his advice to work for himself.

In 1954, Kroc traveled to San Bernardino, California, home to a small hamburger stand owned by brothers Maurice and Richard McDonald. The McDonalds had ordered eight Mixmasters, and Kroc just had to see what kind of operation needed the ability to make forty milk shakes at one time. What he saw when he arrived was a long line of people waiting to place their order. Looking into the building, he saw an all-male crew, each man clad in white paper hats and white uniforms, working in a squeaky-clean kitchen with great efficiency. There were only nine items on the menu (hamburgers, cheeseburgers, french fries, shakes, soft drinks, and pies), and each item was offered at an incredibly low price (fifteen cents for burgers, and ten cents for fries, for example). And, the brothers had developed an "assembly line" process that allowed them to deliver any order in less than sixty seconds. Kroc was greatly impressed.

The McDonald brothers had already established a "chain" of eight hamburger stands in Southern California, but were initially unsure about Kroc's proposal to franchise their operation. After some heavy persuasion, he was finally able to convince them to let him sell franchises at $950 each. Under their agreement, Kroc would get 1.4 percent of all sales in those restaurants he franchised, and another 0.5 percent would go to the brothers.

On March 2, 1955, Kroc formed McDonald's Systems, Inc. (which was renamed McDonald's Corporation in 1960). On April 15, 1955, the very first McDonald's franchise operation opened for business in Des Plaines, a suburb of Chicago, Illinois; the store did $366.12 worth of business that day.

Kroc's formula for sucess was to insure that all McDonald's products were prepared the same and tasted the same, no matter where the particular restaurant was located. He even had a laboratory built in Chicago to devise better methods for making each product, and by the late 1950's every McDonald's hamburger, no matter where it was purchased, was cooked the same way, and contained the exact same amount of toppings.

By 1960, there were more than 200 McDonald's restaurants across the country, and people were practically lining up at Kroc's door to open new franchises. In 1961, Kroc secured a $2.7 million loan, which he then used to buy out the McDonald brothers.

Subsequent Milestones in McDonald's History

1963 The 500th McDonald's opened.
1963 The "One Billion Hamburgers Sold" slogan became valid.
1963 Two Washington, D.C., franchisees hired Willard Scott to create a clown persona for local ads, and Ronald McDonald was "born."

1965 The McDonald's Corporation went public.

1967 The first national McDonald's advertising campaign began, featuring Ronald McDonald, the Hamburglar, Grimace, etc.

1968 Kroc stepped down as chief executive of McDonald's.

1971 The first McDonald's restaurants outside of North America opened, in Japan and Germany.

January 14, 1984 Ray Kroc died in San Diego.

WEB SOURCES
Greatest Business Stories of All Time www.wiley.com/legacy/products/subject/business/forbes/kroc.html
The Time 100: Builders & Titans www.time.com/time/time100/builder/profile/kroc.html

SEE ALSO
World War I
Chicago, Illinois

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This page was last updated on April 13, 2017.