Business Management Blog

Born in Oak Park, Illionis on 5th October, 1902, Kroc can be claimed as the modern concept of fast food inventor. As you might know, Kroc tried out at a variety of jobs before carving out a role as a milkshake mixer salesman. At 52, Kroc had spent most of his life selling mixers. He had been a good salesman and was thinking about his retirement.

In 1954, he walked into the small burger restaurant in San Bernardino run by the McDonald brothers. What impressed Kroc about the restaurant run by Dick and Mac McDonald was the way the business was run.

It was as if Henry Ford had applied his mass production formula to the food business. So efficient was the McDonald’s operation that customers received their meal within sixty seconds. Furthermore, the brothers offered only a very limited menu at extremely competitive prices.

Using all the skills he had, he sold himself to the McDonald brothers, persuading them to license their name to him. In return, they would receive a percentage of the sales for each franchise he created.

In 1955, Kroc’s first restaurant opened in Des Plaines, Illinois. Several others quickly followed according to his strict guidelines. Although he had little trouble convincing franchisees to open McDonald’s restaurants, Kroc still encountered financial problems severe enough to almost bankrupt him.

In 1960, revenues of $75 million translated into profits of $139,000. His solution was to buy the land where the restaurants were to be located and then lease them to the franchisees. This way, Kroc retained control over the business and made more money. A year later, Kroc bought out the McDonald brothers for just $2.7 million.

The four pillars on which Kroc built the McDonald’s empire were: quality, service, cleanliness and value. He also introduced some of his own ideas such as standardizing the size of the burger and the amount of onions served with each one. He even built a laboratory in Chicago to research the ultimate French fries.

Later, he then embarked on a massive advertising campaign. A billion hamburgers by 1963, the 500th restaurant, and the brilliant conception of the Ronald McDonald, appealing to the children. In 1965, more children knew the burger clown than that of the US President.

In 1965 Kroc bring the company went public and bring him $3 million. Kroc expanded overseas after realize the company had firmly established in the US. In 1967, he took the golden arches to Canada, Europe, Asia, and the rest of the world.

Kroc’s great wealth affected him very little as he spent much of his time ensuring his high standards were maintained by the McDonald’s franchises. He died at the age of 81 in San Diego, California.

Source: Business Strategy Review, Winter 2005