Joel Libava
McDonald’s Founder, Ray Kroc was a genius, who by the time of his death in 1984, had helped McDonald’s become the world’s largest restaurant franchise. And at the time, he was one of the most successful businessmen in the world.
Moreover, Ray Kroc helped the franchise industry become the powerhouse it is today.
Let’s take a look at the life of the founder* of the McDonald’s fast-food empire.
*Kind of.
Was Ray Kroc The Founder Of McDonald’s?
You’ll have your answer in due time.
Without a doubt, Raymond Albert Kroc knew he was onto something after seeing the McDonald brothers’ amazing hamburger restaurant in action. In Ray’s case, he was definitely at the right place at the right time. The time?
1954.
The place?
California.
Ray Kroc, Entrepreneur And Franchise Business Hero
Unquestionably, Ray (Raymond Albert Kroc) is my personal franchise business hero. He’s someone who should be a hero to everyone who is part of the franchise industry.
The way I see it, franchisees far and wide owe Ray a debt of gratitude. Because without Ray Kroc, the franchise industry probably wouldn’t exist. Or, if it did, it wouldn’t be as good as it is today. Or as powerful. Or as important to the U.S. economy.
Additionally, the McDonald’s franchise empire wouldn’t be the dominant force it is today, without Kroc’s vision. Ray was the man…in so many ways. His vision for franchising has impacted many people and many franchise concepts over the years. And, still does.
I Featured McDonald’s Founder, Ray Kroc, In My 1st Book
It just so happens that I wrote about McDonald’s founder, Ray Kroc, in my book, Become A Franchise Owner! The following is an excerpt from Chapter 2.
“Born in 1902, Ray Kroc, McDonald’s creator, was a sales guy with incredible vision. He started out selling milkshake mixing equipment, and even mortgaged his home to become a distributor of the ‘Multi-Mixer’ – a hot product during that time that could make five milk shakes at the same time. Ray traveled all over the country, meeting entrepreneurs in the food industry and selling them his products.
During his travels, he had heard about two brothers from California named Dick and Mac McDonald. The McDonalds owned a very busy hamburger stand at which they were using eight of Roy’ milkshake mixing machines — simultaneously. Ray drove to California, since he had to see this for himself. What he observed there was an assembly line-like system being used in – of all places -a restaurant! The McDonald brothers appeared to have this procedure of theirs down to a science.
Ray had an epiphany after seeing this amazing restaurant operation first hand: he envisioned these restaurants being built all over the country. As it happened, the McDonald brothers happened to be looking for a ‘franchising agent,’ to sell franchises across the country — and as someone who’d been a salesman for the past 30 years, Ray Kroc was just the guy for the job.
More From My Book: Doing The Deal
“Ray cemented a deal to be the McDonald brothers’ exclusive agent, and started selling franchises. But he didn’t start McDonald’s. He just knew what to do with it.
At the same time, he also opened the first duplicate of the McDonald brothers’ California restaurant in Des Plains, Illinois. Ray saw something big in the making, and tried to convince the brothers that they should start thinking bigger also. A few years later, the three owned multiple restaurants. However, Ray was the one who wanted to build the eateries into a true ’empire.’ He recognized that it was the perfect time to introduce a chain like this, as automobile travel was becoming increasingly popular the 1950’s, and freeways were beginning to build up* in a big way.“
McDonald’s Real Estate
*Speaking of “building up,” Ray Was very focused on real estate. As in the location for a new McDonald’s restaurant had to be just right.
That said, according to McDonald’s, an ideal site location includes the following:
- 50,000+/- sq. ft.
- Corner or corner wrap with signage on two major streets
- Signalized intersection
- Ability to build up to 4,000 sq. ft.
- Parking to meet all applicable codes
- Ability to build to a minimum height of 23′ 4″
Do you see what I mean about locations needing to be perfect (or close to it)?
Fast Food Trends McDonald’s Ray Kroc Leveraged
Ray had a good eye for knowing what was next.
Let’s start with one of the most important trends Ray (the entrepreneur) capitalized on.
McDonald’s Nugget #1: The franchise fee for a McDonald’s restaurant is $45,000.
Freeways
Travel used to be quite difficult. Until it wasn’t.
More from Chapter 2 of my franchise book…
“Increased automobile use increased the need for paved roads, which ‘paved the way’ for businesses to open up along these new roads – business that could support these drivers’ (and automobiles’) needs. In other words, now that automobiles were common all over America, businesses were sprouting up everywhere that people traveled.
Ray Kroc knew what he wanted. He pictured the McDonald brother’s hamburger restaurants dotting the landscape, and knew that the people traveling all over the country by automobile needed places to stop and eat. Kroc ended buying out the McDonald brothers for a paltry $2.7 million. With the less than motivated McDonald brothers out of Ray’s hair, he was free to bring this idea of his to the next level. And so he did.“
1963
By 1963, McDonald’s had grown so much, that its signs boasted information about ‘One Billion Hamburgers Sold’! By this time, McDonald’s just had just hit its 500th restaurant mark, and it was uphill from there – to say the least. As a result, Ray Kroc’s net worth increased big-time*.
*At the time of his death in 1984, Kroc had an estimated net worth of $600 million.
Today, lots of franchise businesses (including thousands of McDonald’s franchises) are located at just about every freeway exit across America.
Only true entrepreneurs have the vision…clairvoyance really, to “see” what’s coming.
That said, can you think of any other entrepreneurs with that kind of vision? I can.
How about:
- Steve Jobs
- Howard Schultz
- Sergey Brin
- Larry Page
- The dude who founded Microsoft?
So ahead of their time.
So smart.
Ray Kroc: McDonald’s Amazing Entrepreneur
Ray Kroc went from from selling Multimixer milkshake machines to creating and selling franchises. That’s one heck of a jump. And, he sold a lot of franchises over the years.
(The Multimixer)
Think about what this milkshake machine salesperson-with an obvious entrepreneurial urge, was able to do with a simple hamburger stand.
Ray Kroc Net Worth And His Debt
It’s the struggles we go through-work through, really, that make us stronger.
In any event, Ray Kroc had a significant net worth….he was a wealthy man. But, he didn’t start out that way. He certainly wasn’t born with one of these…
As a matter of fact, as you’ll see in this video, Ray started his franchising empire in a lot of debt-thanks to the McDonald brothers-the founders, who omitted one very important thing when they sold their hamburger stand and their name to Ray.
McDonald’s Nugget #2: McDonald’s requires potential franchisees to have a minimum of $500,000 of non-borrowed personal resources to qualify for a franchise.
McDonald’s: Super-Sized Hamburger Empire
The story goes that after working through his debt, Ray’s hamburger restaurants started becoming profitable. Ray Kroc ended up building a franchise empire of epic proportions. Super-sized, actually. Maybe it would help if I visualized the size of the business Ray created. The infographic below is a snapshot of McDonald’s revenue from 2005-2013.
You will find more infographics at Statista
You will find more statistics at Statista
Ray Kroc Entrepreneur Quotes
For the purpose of this article, I spent a half hour or so searching around for the best Ray Kroc quotes. Below, you’ll see which quotes I chose.
Read each one twice to get the full effect…to experience the power of Ray’s words.
“The McDonald brothers were simply not on my wavelength at all. I was obsessed with the idea of making McDonald’s the biggest and the best. They were content with what they had; they didn’t want to be bothered with more risks and more demands.”
“I became a real entrepreneur, crazy enough to take the risk of losing everything.”
“If you believe in something, you’ve got to be in it to the ends of your toes.”
“None of us is as good as all of us.”
“We take the hamburger business more seriously than anyone else.”
“We provide food that customers love, day after day after day. People just want more of it.”
The Founder Of McDonald’s: Ray Kroc. Ray’s Unique Philosophy
“When times are bad is when you want to build! Why wait for things to pick up so everything will cost more?”
“Take calculated risks. Act boldly and thoughtfully. Be an agile company.”
“You’ll learn more about a road by travelling it than by consulting all the maps in the world.”
“No self-respecting pitcher throws the same way to every batter and no self-respecting salesman makes the same pitch to every client.”
“If you’re not a risk taker, you should get the hell out of business.”
“If you do it first class and you don’t compromise values, and you don’t compromise quality, and you don’t compromise service, and you don’t compromise cleanliness, then everybody else who is the competitor has got to play catch-up.”
“To be successful, you must be daring, be first and be different”.
Great stuff. Thanks, Ray.
“If you work just for money, you’ll never make it, but if you love what you’re doing and you always put the customer first, success will be yours.”
“The two most important requirements for major success are: first, being in the right place at the right time, and second, doing something about it.”
“I was an overnight success all right, but 30 years is a long, long night.”
Here’s one more quote. It’s so true.
“It’s easy to have principles when you’re rich. The important thing is to have principles when you’re poor.”
McDonald’s Today
If you’ve read my hardcover book, or have been a subscriber to my blog and/or my VIP Franchise Newsletter, you know that I’m not one to sugar-coat things.
That’s why I have no problem telling you that McDonald’s has had major problems. There’s no other way to say it. (Update: McDonald’s is doing a lot better now)
For years I’ve been writing about the struggles McDonald’s has been going through for the past couple years. I’ve been a very harsh critic. I’ve offered suggestions, freely. I care a lot about the company. I care because it was Ray Kroc’s baby.
The entire franchise industry needs to pay attention to what’s happening at headquarters. It’s that important.
In a nutshell, if McDonald’s doesn’t transform their business into what it once was, the entire franchise industry will take a massive hit. Our credibility as an industry will be lost.
Buying A Franchise?
You're Going To Need This!
Check out some of these headlines from the past:
Bluntly, those were pretty ugly headlines.
But as I said, things may be getting better, although the pandemic has created it’s own sort of unique challenges.
On a personal note, I don’t frequent McDonald’s like I once did. Why?
Because fast-food in general is not as convenient as it once was (it takes too long to get an order). Mostly because of employee shortages.
The Cost Of A McDonald’s Franchise
Just so you know, the total investment for a McDonald’s franchise ranges from $1,366,000 to $2,450,000. That includes an initial franchise fee of $45,000.
But even if you’re a millionaire (with access to that kind of money), there’s no guarantee you’ll be approved for a franchise business.
From the McDonald’s franchising website:
“We want to attract and retain the best restaurant operators – individuals with a growth mindsetand commitment to excellence. Individuals, who, when backed by a powerful brand and a network of resources, suppliers and support, are excited and well-equipped to create success and prosperity for themselves and their communities.“
Translation: you’ll need to have previous restaurant operation experience.
Recent McDonald’s Corporation News And Updates
McDonald’s USA Convenes Top Asian Pacific American Thought Leaders for First-Ever College Education Summit
Helping prove my point about things getting better for McDonald’s, McDonald’s shareholders just re-elected all 12 Directors at their annual meeting.
Another update worth noting, the company has decided to exit Russia over President Putin’s illegal invasion of Ukraine.
Finally, not all franchisees of the most famous fast-food chain in the world are happy with the company. Why?
Because of something named Operations PACE, which stands for Performance and Customer Excellence. Read more about the new program
A Movie!
Did you know that there’s a movie about Ray Kroc? Here’s a clip.
Ray Kroc Dreams And More
Fact: I got to interview Ray Kroc. Read the interview.
I was also able to physically go back in time to eavesdrop on the conversations Ray had with the McDonald brothers.
I have a feeling that Ray is rolling in his grave-and is pretty angry about what’s been taking place at headquarters-and how franchisees were or are faring.
The Bottom Line?
Ray Kroc was the entrepreneur who built the McDonald’s franchise. And he did an amazing job.
Ray Kroc’s dreams came true. He sold thousands of franchises. He enabled a lot of his franchisees to become millionaires. He created amazing business systems.
Do you think his dreams will live on?
Ray Kroc image courtesy wikispaces- https://f08-mana156.wikispaces.com/Ray+Kroc
FAQ’s About McDonald’s Founder, Ray Kroc
Kroc was born in 1902, in Oak Park, Illinois.
The first McDonald’s restaurant was opened in 1940 by brothers Maurice “Mac” and Richard McDonald in San Bernardino, California.
Then, in April of 1955 Kroc launched McDonald’s Systems, Inc.,which became the McDonald’s Corporation, in Des Plaines, Illinois. And it was there that the first McDonald’s franchise east of the Mississippi River opened.
Kroc bought out the McDonald brothers in 1961.
Kroc bought the San Diego Padres in 1974. His wife sold the team in 1990.
Kroc co-authored “Grinding It Out” in 1977.
When Kroc died in 1984, he had a net worth of $600 million.
