Ray Kroc

American businessman

• Born: October 5, 1902
• Birthplace: Oak Park, Illinois
• Died: January 14, 1984
• Place of death: San Diego, California

Kroc revolutionized the fast-food industry with his pioneering development of McDonald’s restaurants, a franchise that has become a symbol of American business and is known throughout the world. Kroc’s genius was to focus on the concept of the franchise, making his stores uniform and predictable and keeping franchise fees low.

Early Life

Ray Kroc (krawk) was born the son of Rose Kroc and Louis Kroc, a struggling real estate salesman. He spent most of his early life in the Chicago area attending public schools, but he dropped out of high school after his sophomore year. At the age of fifteen, he lied about his age to enter the Red Cross during World War I and was trained to be an ambulance driver. However, he was never deployed to Europe. He returned from that service and made a living playing piano and taking on various sales jobs, including a failed attempt to capitalize on the Florida real estate bubble.

Kroc married Ethel Fleming in 1922 and settled with a successful career with the Lily-Tulip Cup Corporation. He was not a passive salesman, simply taking business orders. He studied businesses and made suggestions about how to improve productivity, thereby increasing his own sales. As his sales increased and diversified, Kroc became a student of the food-service industry, taking special note of the trends in carry-out dining. Among his greatest successes was his role in persuading the Walgreen’s drug store lunch counter to add a carry-out business. Kroc rose to the level of sales manager for the Midwest with the cup company. He was financially successful and settled into a comfortable lifestyle with a nice house and a country-club membership by the time he was in his thirties. He showed no indication that he was ever interested in opening his own restaurant.

Life’s Work

Kroc did not invent fast food, nor did he found McDonald’s restaurants. His sense of curiousity led him to the drive-in of Richard and Maurice McDonald in San Bernardino, California, through an interesting and unplanned chain of events.

After seventeen years in his sales job with the cup company, Kroc focused his sales on a restaurant product called the Multimixer, which allowed multiple milkshakes to be produced simultaneously. Lily-Tulip dropped the machine from its product lineup, so, in 1939, Kroc decided to go into business himself, selling the Multimixers. His business selling Multimixers to soda fountains boomed until World War II. While the demand was still strong, the company could not get copper for the electric motors used in the Multimixer, so the company began to struggle.

Ever the business innovator, Kroc modified his business by selling stabilizers for ice-milk products to keep his company afloat during the war. After the war, sales of the Multimixers again increased. However, imitators entered the competition, leading to a continuous drop in sales for Kroc in the early 1950’s. Out of concern for saving his company, he traveled to San Bernardino to see why a small drive-in restaurant operated by the McDonald brothers purchased so many Multimixers for its operation. While Kroc did not have any direct experience in the restaurant business, his work as a supplier educated him about the workings of providing food to consumers. Kroc’s discovery of McDonald’s drive-in was not a random occurrence. He knew the business very well and knew that the McDonald’s business model was unique.

Kroc could have attempted to open up his own drive-in, but he instead decided to make a deal for the franchising rights to other McDonald’s restaurants. By carefully studying their operations and learning from their successes and failures, Kroc created manuals that called for a uniform quality to the products served at all McDonald’s. At the age of fifty-two, he incorporated McDonald’s. Franchises sold, but the business was not an instant success.

On April 15, 1955, Kroc opened his showcase McDonald’s in Des Plaines, Illinois. The new store specialized in the fifteen-cent hamburger and the self-service drive-in. Drive-ins were common for carry-out restaurants starting in the 1930’s, but the McDonald’s stores were different: They were self-service. McDonald’s polished the fast-food concept, but what made the business unique was that Kroc, by keeping the franchise fee for the restaurants low, popularized the idea of the franchise.

Many of the McDonald’s franchises initially failed to prosper, primarily because each store had a different menu and different operations. Kroc’s genius was to set a new industry standard by making each franchise uniform in its service and products. Hamburgers were made ten to a pound, comprising 1.6-ounce, 3.9-inch-diameter beef patties. Each had a quarter ounce of onions and sold for fifteen cents. The storing and frying of potatoes, too, was carefully determined. Eventually, owners and managers would be trained about the specific techniques required for operating a McDonald’s franchise, leading to the formation of Hamburger University, first operated in the basement of one store in 1961.

Kroc’s franchises did not make him wealthy immediately, but the loyalty of his franchisees gave him a competitive advantage. However, if a franchisee failed to strictly follow the corporate rules of operation, Kroc would no longer support that store. Even though Kroc wanted uniformity in operations, he also encouraged innovation in the development of new products and increased productivity. Through experiments, franchisees created new menu items, including the Big Mac, the Egg McMuffin, and the Filet-O-Fish sandwich.

The consistent growth of McDonald’s restaurants through the early 1960’s led Kroc to offer many of his shares on the New York Stock Exchange. The sale of these shares made Kroc an overnight millionaire at the age of sixty-two. McDonald’s rapidly spread through the suburbs of the United States and, eventually, throughout the world. Each individual McDonald’s operation had to pledge to follow Kroc’s principles of “Quality, Service, Cleanliness, and Value.” People knew what to expect when they entered a McDonald’s restaurant.

Kroc continued to work to expand McDonald’s, but he had to slow down after suffering a stroke in 1979. In 1974, Kroc had founded Ronald McDonald House Charities, an organization that helps seriously ill children and their families. He contributed to conservative political causes (especially Richard M. Nixon’s presidential campaign) and purchased a professional baseball team, the San Diego Padres.

Significance

Kroc has been both honored and vilified for his development of McDonald’s. He pioneered a low-cost, uniform food alternative in a relatively clean and simple environment that was duplicated in each store throughout the world. His operations are still studied by numerous corporations hoping to learn about efficient, but inexpensive, customer service.

McDonald’s has been criticized as well for offering an unhealthy, high-fat menu. The restaurants were deeply criticized in the Academy Award-nominated film Super Size Me (2004), which documented the physical effects on the human body of eating meals at McDonald’s exclusively for thirty days. In popular culture, the term “McJobs” is commonly used to describe any type of low-paying job without benefits, and the idea of “McDonaldization” evokes a bland uniformity at the expense of variety and choice.

The philanthropy of Joan Kroc, Kroc’s third wife, ran counter to much of her husband’s conservative interests. After his death she donated millions of dollars to substance-abuse treatment facilities and to the Peace Studies Centers at the University of San Diego and the University of Notre Dame, and she shocked many with her donation of more than 1.5 billion dollars to the Salvation Army.

Bibliography

Kincheloe, Joe L. The Sign of the Burger: McDonald’s and the Culture of Power. Philadelphia: Temple University Press, 2002. This critical examination of McDonald’s questions the public good of the huge corporation.

Kroc, Ray, with Robert Anderson. Grinding It Out: The Making of McDonald’s. New York: St. Martin’s Press, 1992. Kroc’s autobiography, first published in 1977, details his passion behind making McDonald’s into a powerful business using simple principles.

Love, John F. McDonald’s: Behind the Arches. Rev. ed. New York: Bantam Books, 1995. A detailed corporate history that starts with Ray Kroc’s early career as a salesman to his development of an organizational structure known around the world.

Moser, Penny. “The McDonald’s Mystique.” Fortune, July 4, 1988, 112-116. Attempts to uncover the appeal of McDonald’s. Provides a brief history of the chain but concentrates on why McDonald’s retains a positive image.

Ritzer, George. The McDonaldization of Society. 1993. Rev. ed. Thousand Oaks, Calif.: Pine Forge Press, 2004. Ritzer views the “McDonaldization” of society with a great deal of skepticism, as enshrining homogeneity and mediocrity at the expense of variety, individualism, and excitement.

‗‗‗‗‗‗‗, ed. McDonaldization: The Reader. Thousand Oaks, Calif.: Pine Forge Press, 2002. A companion to Ritzer’s classic work. Can, however, be examined separately as a collection of writings on Ritzer’s original concept.