The entrepreneur who built McDonald’s into the world’s most successful fast food chain
Ray Albert Kroc was born to parents of Czech origin in Illinois in 1902. He served as a Red Cross ambulance driver in the First World War, lying about his age to begin serving at 15. After the war, Kroc tried his hand at various careers. Over the next 30 years, he was a pianist, radio DJ, a salesman and he worked in hotels and restaurants. Eventually, Kroc became a travelling milkshake machine salesman. It was in this role that, in 1954, he came across the McDonald brothers, clients of his who had a number of restaurants in San Bernardino, California. He saw great potential in the chain and in their assembly line approach to the preparation of hamburgers. Unlike other hamburger restaurants, they offered a limited menu of choices, which meant they could focus on quick service and quality. Kroc joined them as a franchising agent for a percentage of the profits. At the time, large geographic franchises were standard industry practice, but Kroc innovated by insisting on single-store franchises in order to maintain control. He became president of McDonald’s Corporation in 1955 and bought the brothers out in 1961 for $2.7 million.
Kroc introduced many efficiencies and innovations. His most important new idea was the assembly line method in order to automate and standardise the fast food process. He carefully screened applicants for franchises, searching for drive and ambition. Those chosen attended ‘Hamburger University’ in Elk Grove, Illinois, a first in the restaurant business, where they learnt all the techniques and methods to produce perfect hamburgers and French fries. They learnt Kroc’s strict guidelines regarding preparation, portion sizes, cooking processes, cleanliness and staff management. This ensured that McDonald’s food looked and tasted the same across the world. He introduced a rule that customers would get a refund automatically, if their food took more than five minutes to arrive.
In later life, Kroc became a philanthropist. He was a major donor to schools and charities and his foundation supported research and treatment of alcoholism, diabetes and other diseases.
At the time of Kroc’s death in 1984, at the age of 81, McDonald’s had 7,500 restaurants in 31 countries and was valued at $8 billion.
You need ego and tremendous self-belief. Ray Kroc said, ‘To be an entrepreneur, you have to have a large ego, enormous pride and an ability to inspire others to follow your lead.’ All successful pioneers have great self-belief. This gives them the strength to persevere through the bad times and the doubters.
You are never too old to start innovating. Kroc joined McDonald’s as an employee at the age of 52 and became the owner of the chain at 59. He continued working in the business for the next 20 years.
Focus on the process, not just the product. Kroc’s major innovations were in the systems and methods used in fast food production. The hamburgers and fries that McDonald’s produced were not, necessarily, better than those of competitors. However, consistency, faster speed of service and lower costs gave the chain a winning competitive advantage. What innovations can you introduce to the systems and processes in your business? How can you streamline them and speed them up?