FTC Disclaimer: I am a brand ambassador for Central Arkansas McDonald’s, which means I receive compensation for sharing my thoughts about McDonald’s. However, all opinions are 100% my own.
Most of us know the name McDonald’s. The name may bring to mind visual images such as the Big Mac, the Happy Meal, or perhaps the oft-busy play places that many of the locations boast. Regardless of whether you eat there, you can probably admit that McDonald’s is a great example of a successful business that has stood the test of time.
However, do you know the story of the man behind the success?
His name was Ray Kroc.
Ray Kroc was an entrepreneur from childhood. His first entrepreneurial endeavors included running a lemonade stand (which is a typical way to earn money as a child) and opening a music store with some of his friends (not so typical).
He quickly learned that he excelled at selling things. Not surprisingly, his adult life was filled with jobs that enabled him to hone his sales skills. From selling cups to selling real estate, he thrived in that industry.
He broke into the food industry when he connected with a customer who owned several ice cream shops. This customer had invented a machine that was able to make several milk shakes at the same time, The Multimixer. Ray saw how innovative this product was and recognized that there was a market for it, so he started the Malt-A-Mixer Company and started selling the Multimixer to other ice cream stands and restaurants.
As you may expect, he was very successful in this business. Not just because of his sales skills, but because he knew that people liked innovation. Part of his strategy was to create new drinks with his machine that had customers raving.
However, as large restaurants became more popular in the 50’s, Ray knew that he had to change things up. One of his longstanding customers, was a restaurant in California that had bought 8 of his Multi-mixers. It was called McDonald’s and was run by a pair of brothers, Maurice and Richard McDonald.
The small restaurant was a popular one that operated by letting people order from outside the building, by paying at a window. They had a very small menu since they specialized in burgers, fries, soda, and milkshakes. However, the big draw was that they were fast. They were able to serve people hot and delicious food quickly due to the owners using an assembly line method to cook and prepare the meals.
Ray felt like the brothers were on to something huge and told them that they should consider expanding. When they said that they did not want to take on the extra work associated with expanding, Ray struck a deal with them: they would allow him to franchise the restaurant and he would share the profit with him. They agreed!
Thus, the McDonald’s System Inc. was born. Ray’s focus was on making sure the new restaurant was consistent with the original. He wanted the restaurant to be clean, attractive, and efficient. He also had a huge focus on quality and exceptional customer service. He made $366 profit in his first day, which was probably a really big deal at that time. After he’d successfully set up the first restaurant, he started helping other people open their own franchised restaurants. Within 2 years, there were 40 restaurants!
In keeping with his focus on consistency, Ray established some standard rules for each restaurant, but also allowed the franchise owners to recommend new food, which is how we ended up with menu items like Filet-O-Fish, Big Mac, Apple Pie, Egg McMuffin, Quarter Pounder, Chicken McNuggets, Salads, and Fruit Smoothies. There were some failed options, like the Hula Burger (grilled pineapple and cheese on a bun), that Ray decided to get rid of. But, for the most part, the food was a success.
Kroc eventually decided to take things a step further by going back into real estate. He set up a real estate company that bought land and then rented it out to franchisees so that they could open more restaurants.
In 1960, he sold his Malt-A-Mixer company and established McDonald’s Corporation. By this point, there were 228 restaurants! In 1961, the McDonald’s brothers relinquished control of the company for a cool 2.7 million dollars!
Ray spent the 60’s expanding like crazy – even into Canada and Puerto Rico. He started marketing the brand as affordable and family friendly by adding introducing the brand’s mascot, Ronald McDonald in 1963 as well as play places and the ever-popular Happy Meal (developed in 1979, these kid-friendly meals also allowed McDonald’s to collaborate with TV shows, movies, and toy brands).
Today, there are over 36,000 McDonald’s restaurants all over the globe. And it all started with one man’s vision.
That’s pretty impressive, if you ask me.
I admit that I didn’t know any of this a few months ago. However, Ray Kroc’s story has taught me several valuable business lessons.
Hone Your Skills
Ray learned at an early age that he had a natural knack for salesmanship. So he spent decades honing that skill. I think that is a very important lesson. So many of us have skills and talents that we recognize, but instead of using them, we run off to do other things. Instead of ignoring our natural talents, we should actively work to master them.
It doesn’t even have to be a natural skill. Ray was not a born restaurateur. He had to learn from the McDonald’s brothers how to successfully manage a restaurant. He could have very well ignored their advice. After all, they didn’t even want to expand their restaurants – that was his idea! However, he knew that they had the skills to run a successful restaurant and so he paid attention, applied their advice, and developed the skills HE needed to do the same.
Be Innovative and Take Chances
Ray wasn’t afraid to do things different and take risks. When he saw an opportunity to do something big, he did it. And it paid off! This is a HUGE lesson. So many people live life wanting to do big things but afraid to try because there is always a possibility of failure. However, if we always operate from a failure mindset, we will never get to where we want to be.
Despite the risks that he took, Ray did not take them lightly or without though. Every aspect of the growth of McDonald’s was strategically planned. Ray knew his target audience ad did everything he could to ensure that they not only knew about the McDonald’s brand, but that they chose to eat there with their families. He was a brilliant marketer and, whether or not we want to admit it, marketing is critical for EVERY business’s success.
Learn from Mistakes
Even though he had a ton of success throughout his entrepreneurial journey Kroc was not immune to making mistakes or bad decision. However, he acknowledged those mistakes, took action to address them, and then learned from them. The inability (or unwillingness) to acknowledge and learn from one’s own mistakes is likely to be one’s downfall.
Ray Kroc believed in consistency when it came to operations and customer service. This lesson can be extended to just about every aspect of business. From your marketing strategy to customer service to developing your products/services, consistency is key. It even applies well to daily life. I know for a fact that I get more done with my home and work life when I am consistent (which I admit is not all the time, lol).
Focus on Quality
Ray also believed in quality. In the restaurants. With the food. With customer service. All businesses should strive to incorporate quality and excellence in every aspect of their business.
Diversify Your Income
Personally, I think that Ray’s move into real estate was brilliant. By owning land to rent specifically to McDonald’s franchisees, he was basically creating a loop of wealth where one income stream supported and was supported by the other. I know it may seem cliché, especially if you have been in the online business world for a while, but it really is important that small biz owners learn to diversify their income. That’s why I have always been eager about generating multiple streams of income.
Ray Kroc became a very wealthy man. What I love about his story is that he didn’t keep that wealth to himself. He made a point to be philanthropic whenever he could, donating to charities and engaging in charitable activities. He started the Kroc Foundation, which raised money to help fight diseases like diabetes, multiple sclerosis, and arthritis. His legacy continues to this day as McDonald’s partners with charities like Reading is Fundamental (which helps to promote childhood literacy), and (of course) setting up Ronald McDonald House Charities across the nation, including right here in Central Arkansas (by the way, there is a grand opening on November 16th).
So there you have it, folks! These are the lessons that I have learned from one of the most successful business owners out there. What did you take away from Ray Kroc’s legacy? Feel free to share in the comments below.