With over 39,198 restaurants in over 100 nations, $112 billion in global sales and $23 billion in revenue for 2021, McDonald’s is the largest fast-food restaurant chain in the world.
This is The story behind the brand: McDonald’s.
Inventors Mac and Dick McDonald put the fast in fast-food
The year is 1948 and the McDonald’s brothers, Mac and Dick have just shut down their successful restaurant which they had been operating for eight years for alterations. When they reopened, a few months later, the restaurant became a drive-in and featured an innovative and unique food preparation system – the Speedee Service System.
The Speedee Service System applied the principles of manufacturing production to fast food allowing the drive-in restaurant to cook and deliver its menu faster and therefore cheaper and in high volumes.
The McDonald’s self-service drive-in restaurant had only nine items: hamburger, cheeseburger, soft drinks, milk, coffee, potato chips and a slice of pie. The staple of the menu was the 15 cent hamburger and the staff worked in a conveyor system to serve up dishes. Customers placed their orders and received their meals in less than a minute.
The fast-food restaurant became an instant hit with more demand than they could supply. Which led the brothers to begin franchising their concept.
Ray Kroc, the man with the business vision
In 1954, salesman Ray Kroc was having a hard time selling multimixers, five-spindle milkshake-mixing machines. Ray was ambitious, successful and willing to work hard.
For a good period of time, the multimixer sales had been booming. Unfortunately, this would soon change. When people began leaving the cities for the suburbs, his restaurant clients closed and sales plummeted. Now no one was ordering the multimixer. Except for a drive-in restaurant in San Bernardino, California which had recently called to have 8 multimixers delivered.
Ray is intrigued and pays the restaurant a visit. Mac and Dick McDonald show Ray the business. When the seasoned salesman sees the Speedee Service System, he quickly recognizes its huge potential. The brothers told Ray they were looking for a nationwide franchising agent. Without skipping a beat, Ray jumps at the opportunity and signs the franchise contract. He immediately sets an ambitious goal: to open 1,000 McDonald’s from coast to coast.
The McDonald’s success ingredient: one system to deliver the same values worldwide
Ray opened his first McDonald’s in 1955 in a Chicago suburb and sold 18 franchises in the first year in business. He fully understood that if the drive-in restaurants were to be successful, the franchisees had to implement the McDonald’s method to a tee.
To ensure this, Ray developed a 75-page manual that outlined every aspect of running a self-service drive-in McDonald’s restaurant.
“In business for yourself, but not by yourself.”
Ray Kroc
He soon realized that if the franchisees were to be successful, the location of the McDonald’s restaurants was of utmost importance. To support the business and the franchisees, Ray paired the hamburger selling business with a real estate business. He set up a company that would purchase or lease the land on which all McDonald’s restaurants would be located.
Today the company has clear guidelines on the required characteristics of the best location for a McDonald’s restaurant:
- 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″
Ray Kroc buys the McDonald brothers out of the business
Like any savvy businessman, Ray is always looking for ways to maintain value, increase revenue and cut costs. To achieve this, he talks to the brothers about changes he wanted to make to the McDonald’s Method; the brothers are unflinching and Ray’s proposals are rejected. Mac and Dick and their lack of business vision soon become an obstacle in Ray’s path to fulfilling his ambitious goals for McDonald’s.
He tells the brothers that he wants full control over the business and asks them to propose a buy-out price. They ask for $2.7million. Ray agrees and acquires the rights to the McDonald’s business in 1961.
McDonald’s thrives thanks to its unique view on doing business: the Three-Legged Stool philosophy
The company’s core values are Quality, Service, Cleanliness, and Value. These values can be successfully upheld only if McDonald’s franchisees, suppliers and employees work together in unison. They are the three legs that support the business.
Leadership lessons from McDonald’s success story:
- Innovation. McDonald’s owes its global success to the innovation of its founders, brothers Mac and Dick McDonald. They realized that they could serve their customers better if they provided delicious food and faster service than their competitors by building a custom food preparation system.
Create a unique way of catering to your customers’ needs. - Ambitious business vision. Ray Kroc saw the potential of the McDonald’s system and amplified it. Ray’s business vision and business-building skills are the driving force behind McDonald’s fast-growing national and international footprint.
Dream big and write a plan to see your dream come true. - System first. The McDonald’s franchisees can easily replicate the restaurant’s worldwide success by following its guidelines and implementing its systems. When you’ve achieved your goal once, create a system so you can achieve it every time.
