Ray Kroc

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Ray Kroc (credit: Sygma)

(born Oct. 5, 1902, Chicago, Ill., U.S. — died Jan. 14, 1984, San Diego, Calif.) U.S. restaurateur, a pioneer of the fast-food industry. He was working as a blender salesman when he discovered a restaurant in San Bernardino, Calif., owned by Maurice and Richard McDonald, who used an assembly-line format to prepare and sell a large volume of hamburgers, french fries, and milk shakes. Beginning in 1955 Kroc opened his first McDonald's drive-in restaurant in Des Plaines, Ill., paying the brothers a percentage of the receipts. He soon began selling franchises for new restaurants, and he instituted a training program for owner-managers that emphasized automation and standardization. At the time of his death there were some 7,500 McDonald's restaurants worldwide; with more than 25,000 restaurants in the early 21st century, McDonald's was the world's largest food-service retailer.

For more information on Raymond Albert Kroc, visit Britannica.com.

Raymond Albert Kroc (1902-1984) was a salesman who set up the first franchise of the McDonald brothers' drive-in restaurant. He bought the golden arches symbol from them and built the McDonald's chain based on the concepts of a limited menu of controlled quality and uniformity combined with massive advertising.

Ray Kroc was born in Chicago, Illinois, on October 5, 1902, the son of relatively poor parents. He went to public schools in Oak Park, Illinois, a suburb of Chicago, but did not graduate, leaving school to serve as an ambulance driver during World War I, like Ernest Hemingway, also from Oak Park. After the war Kroc became a jazz pianist, playing with the Isham Jones and Harry Sosnick orchestras. Upon his marriage in 1922 he went to work for the Lily-Tulip Cup Company, but soon left to become musical director for one of Chicago's pioneer radio stations, WGES. There he played the piano, arranged the music, accompanied singers, and hired musicians. Kroc's wanderlust was not satisfied with this, and the real estate boom in Florida soon found him in Fort Lauderdale selling real estate. When the boom collapsed in 1926 Kroc was so broke that he had to play piano in a night club to send his wife and daughter back to Chicago by train. He later followed them in his dilapidated Model-T Ford.

Kroc thereupon returned to Lily-Tulip as a salesman, later becoming midwestern sales manager. In 1937 he came upon a new invention, a machine that could mix five milk shakes at one time, called the "multi-mixer." Kroc founded his own company to serve as exclusive distributor for the product in 1941. Many years later, in 1954, Kroc heard of a drive-in restaurant in San Bernardino, California, owned by Richard and Maurice D. McDonald, which was operating eight of his multi-mixers. Curious as to how they could possibly use so many machines in a small establishment, Kroc found the brothers were doing a remarkable business selling only hamburgers, french fries, and milk shakes. Kroc, from his years in the paper cup and milk shake business, recognized a potential gold mine and approached the brothers about starting a franchise operation based on their restaurant, selling hamburgers for 15 cents, fries for 10 cents, and shakes for 20 cents. After some negotiation the McDonald brothers agreed. Under the arrangement, they would receive one-half of one percent of the gross, Kroc would use the McDonald name and concept, pledged to retain high levels of quality, and would retain their symbol - the golden arches. Ray Kroc opened the first of the chain of McDonald's restaurants on April 15, 1955, in Des Plaines, Illinois.

Small by today's standards, this restaurant in Des Plaines (now the world's first "Hamburger Museum") was a little red and white tile affair where root beer was poured from a wooden barrel, potatoes were peeled in the restaurant, and there were local supplies of fresh hamburger meat. The symbol, now long forgotten, was Speedee, a hamburger-bun-faced creature. On that first day, Kroc's restaurant had sales of $366.12. By 1961 there were over 130 outlets, and in that year Kroc bought out the McDonald brothers for $2.7 million. From these humble beginnings emerged an empire which by 1984 had 8,300 restaurants in 34 countries with sales of more than $10 billion.

Ray Kroc revolutionized the restaurant industry in much the same way that Henry Ford transformed the automobile industry a generation earlier. Kroc's great contribution was to figure out how to mass-produce food uniformly in astounding quantities, and then to convince millions of Americans that they needed to buy this food. To accomplish the first objective, Kroc reduced the food business to a science. Nothing was left to chance in the logistics of the McDonald's operations, which were carefully researched by sophisticated methods. The precision of the operation can be appreciated when it is understood that each McDonald hamburger was made with a 1.6 ounce beef patty, not more than 18.9 percent fat. It is exactly .221 inches thick and 3.875 inches wide. All other aspects of the operation are equally rigidly controlled. Kroc also relentlessly stressed quality, banning from his hamburgers such filler materials as soybeans.

The other side of the McDonald's success story is franchising, marketing, and advertising. Three-quarters of McDonald's restaurants are run by franchise-holders. By 1985 each franchise cost about $250,000 and ran for 20 years, after which it reverted to the company. When choosing franchise-holders, Kroc always looked for someone good with people. As he said," … we'd rather get a salesman than an accountant or even a chef." The franchise owners were then intensely trained at McDonald's "Hamburger University" in Elk Grove, Illinois, where a training course led to a "Bachelor in Hamburgerology with a minor in french fries." The company also provided a lengthy manual that outlined every aspect of the operation, from how to make a milk shake to how to be responsive to the community. The capstone of the McDonald's operation, however, was advertising. Hundreds of millions of dollars were poured into advertising - to the point where the head of another fast-food company said in 1978 that consumers were "so preconditioned by McDonald's advertising blanket that the hamburger would taste good even if they left the meat out."

Despite its astounding success, and despite the fact that the company worked hard to project a charitable and community-oriented image, McDonald's came under attack on several fronts. A number of communities refused to allow its restaurants in their area, seeing it (as one commented) as a "symbol of the asphalt and chrome culture." The company was also criticized for its extensive use of part-time teenaged help, and especially for the $200,000 which Kroc donated to Richard Nixon's re-election campaign, since the administration soon after recommended amending the minimum wage law to provide for a "youth differential." This would have allowed employers to hire teenagers at 80 percent of the minimum wage. The architecture of the buildings and the nutritional content of the food was assailed, although nutritionist Jean Mayer said that as "a weekend treat, it is clean and fast."

In the mid-1970s Kroc turned his energy from hamburgers to baseball, buying the San Diego Padres. He had less success at this, however, and in 1979 gave up operating control of the team, saying with his typical crustiness, "there's a lot more future in hamburgers than in baseball. Baseball isn't baseball anymore." In the years before his death he and his second wife, Joan, set up foundations to aid alcoholics and established Ronald McDonald houses to help the families of children stricken with cancer.

Kroc cut a commanding figure, his thin hair brushed straight back, his custom blazers impeccable, the bulky rings on his fingers glinting as he ate his hamburgers with both hands. Aware of his abrasiveness, he once commented: "I guess to be an entrepreneur you have to have a large ego, enormous pride and an ability to inspire others to follow your lead." He died in San Diego on January 14, 1984.

Further Reading

Kroc's autobiography, Grinding It Out (1978), is of some interest. A more critical perspective is provided by Max Boas and Steve Chain in Big Mac (1976).

(1902-1984), fast-food restaurant franchising pioneer. By developing the McDonald's Corporation (1955), the world's largest restaurateur changed public eating habits and the franchising industry.

A franchisor licenses others to (a) sell its products or (b) use its business format (name and operating methods). Product franchising has a long history, having been used by Isaac Singer in appointing sewing machine agent-dealers in the mid-nineteenth century. Product franchisors profit primarily from the sale of their wares to the franchisees. Ray Kroc was a leader in strict business-format franchising, whereby licensees must conform to detailed operating rules, normally pay the franchisor licensing fees and royalties on sales, and, often, buy merchandise from approved suppliers.

Raymond Albert Kroc, born in Chicago, never finished high school. He became a volunteer ambulance driver in World War I, a dance-band musician, a salesman and district sales manager for Lily-Tulip paper cups and plates, and a promoter of a milk shake mixing machine. This modest career taught him much about the low-price food service market, apparently fostered a strong drive for achievement when the opportunity emerged in his fifties, and probably reinforced such traits as persistence, optimism, and hard work, an ability to select and nurture ambitious associates, and an intuitive sense of mainstream American culture. An ardent political conservative, Kroc vigorously espoused an antiregulatory philosophy and particularly sought a modification of the minimum wage law to permit payment of lower wages to teenage and student workers. He contributed to the development of management practices by example rather than by theoretical writing.

In 1954, wondering why the McDonald brothers' small San Bernardino, California, hamburger stand needed so many of his milk shake mixers, he discovered they had developed a high-volume factory-like mass production (labor-specialization, task-routinization) system that produced good sandwiches at a low price. The brothers had already attracted much attention and had lackadaisically franchised some other restaurants, but with little guidance, control, or success.

Kroc persuaded the brothers to make him their exclusive agent in licensing others to use the McDonald name and methods and established McDonald's Corporation for the purpose. At the time few potential licensees anticipated how McDonald's would grow. Kroc also opened his own McDonald's drive-in in Des Plaines, Illinois, to demonstrate the format's profitability. Since he received only a small portion of the relatively low franchise royalty rate established by the McDonalds, his own restaurant earnings exceeded his income from franchising for a number of years. But he continued enthusiastically recruiting and supervising franchisees. He insisted on meticulous cleanliness and constantly improved the operating system. Under a plan he and an associate, Harry Sonnenborn, created, the Kroc-dominated corporation bought the real estate for new locations and then rented it to the franchisees on long-term leases. This increased revenues to support a field staff to work with franchisees and made the corporation more appealing for banks and other major lenders of capital funds. In 1961, the corporation bought out the brothers' interest at a price they themselves proposed but later regretted. In 1977, Kroc assumed the title of senior chairman. McDonald's had sold 65 billion hamburgers by 1987, the year before it opened its ten thousandth store.

The emphasis on cleanliness continued, but many of his (and the McDonalds') original ideas were ultimately modified. The store duties remained minutely divided and easily learned by large numbers of part-time, low-wage, teenage workers. But by the late 1980s, a dwindling teenage population had forced recruitment of senior citizens and others, and in some areas wages (and costs) increased. Fish, chicken, salad, and breakfast items were added to the original hamburgers to meet changing tastes and the need for higher sales volume. These changes complicated operations, slowed service, and increased costs. Tables and chairs finally appeared at most locations, without attracting the loungers Kroc feared.

Most early stores were located in small towns and suburbs to seek the family trade Kroc desired and were highly standardized in appearance with the ubiquitous "golden arches" outside. Subsequent units in city centers, airports, and other sites required exterior design changes. "Americanism" was a central theme in early McDonald advertising, but the corporation expanded to approximately fifty countries, including finally even the Soviet Union. The growing corporation acquired direct ownership of 25 to 30 percent of its restaurants, including many of the most profitable ones. Thus both the restaurants and the corporation became far more complex than Ray Kroc had originally envisaged, yet they retained much of his style and business philosophy.

Bibliography:

Max Boas and Steve Crain, Big Mac: The Unauthorized Story of McDonald's (1977); John Love, McDonald's behind the Arches (1986).

Author:

Stanley C. Hollander

Quotes:

"Are you green and growing or ripe and rotting?"

"Luck is a dividend of sweat. The more you sweat, the luckier you get."

"All money means to me is a pride in accomplishment."

"Its easy to have principles when you're rich. The important thing is to have principles when you're poor."

"If you're not a risk taker, you should get the hell out of business."

"In business for yourself, not by yourself."

See more famous quotes by Ray Kroc

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Raymond "Ray" Albert Kroc (October 5, 1902 – January 14, 1984)^[1] was an American businessman who took over the (at the time) small-scale McDonald's Corporation franchise in 1954 and built it into the most successful fast food operation in the world. Kroc was included in Time 100: The Most Important People of the Century,^[2] and amassed a $500 million fortune during his lifetime.^[3] He was also the owner of the San Diego Padres baseball team starting in 1974.

Contents 1 Biography 1.1 Early life 1.2 Death and personal life 2 References 3 External links

Biography

Early life

Kroc was born to parents of Czech origin in Chicago, Illinois, in 1902. He grew up and spent most of his life in Oak Park, Ill. During the First World War he trained to become an ambulance driver, though the war ended before he ever saw action. Between the end of the war and the early 1950s he tried his hand at a number of trades including paper-cup salesman, pianist, jazz musician, band member and worked at an Oak Park radio station.^[4] At one time, Ray worked for room and board at one of Ray Dambaugh's (a restaurant and known gambler with Jimmy the Greek) restaurants in the mid west to learn the restaurant business. He later returned the favor years later by coming to Ray Dambaugh's funeral in Evans City, Pa to say thanks. He eventually became a multi-mixer milkshake machine salesman, traveling across the country.

Convinced that he could sell numerous mixers to every new restaurant that opened, he partnered with the McDonald brothers to open and franchise additional McDonald's restaurants. Kroc eventually became frustrated with the brothers' willingness to accept their chain having only a handful of restaurants. In 1961, he purchased the company from the brothers. The agreement was for the McDonald's to receive $2.7 million for the chain and to continue to receive an overriding royalty of 1.9% (when negotiating the contract the McDonald brothers said that 2% sounded greedy, 1.9% was much more attractive) on the gross sales.^[4]

The agreement was a handshake with split agreement between the parties because Kroc insisted he could not show the royalty to the investors he had lined up to capitalize his purchase. At the closing table Ray became very annoyed that the brothers would not transfer to him the real estate and rights to the original unit. The brothers had told Kroc that they were giving the operation, property and all, to the founding employees. Kroc closed the transaction, then refused to acknowledge the royalty portion of the agreement because it wasn't in writing. The McDonald brothers consistently told Ray that he could make changes to things like the original blueprint (building codes were different in Illinois than in California), but despite Ray's pleas, the brothers never sent any formal letters which legally allowed the changes in the chain. He also opened a new McDonald's restaurant near the McDonald's (now renamed "The Big M" as they had neglected to retain rights to the name) to force it out of business.^[5]

Ray Kroc created a new kind of fast food with McDonald's, implementing Henry Ford's assembly line idea into his restaurants. He also utilized standardization, a business tactic that he used to make sure that every Big Mac would taste the same whether a person is in New York or Tokyo. Kroc also knew, for the most part, what the people wanted, which was standardized hamburgers. However one of his most famous flops was the Hulaburger, which consisted of a slice of grilled pineapple, with some cheese, on a bun. This was to appeal to Catholics who gave up beef during Lent. Kroc also revolutionized the art of franchising, where he set strict rules on how the food was made, but as for the marketing of the product, however, he let the franchisees decide on what the best approach was. For example, an actor named Willard Scott created the internationally recognized figure known as Ronald McDonald to improve sales of hamburgers in the Washington, D.C. area.

Kroc established various foundations for alcoholics, and also started the Ronald McDonald House foundation.

Death and personal life

Kroc died of a heart ailment at Scripps Memorial Hospital in San Diego, California, on January 14, 1984 at the age of 81. Kroc was married to his third wife, Joan B. Kroc. Before he died he had been married twice before, to Ethel Fleming (1922–1961) and Jane Dobbins Green (1963–1968), who had been John Wayne's secretary. Toward the end of his life, Kroc used a mobility aid to get around, an Amigo POV/scooter. ^[6][7] Ray Kroc had 4, children. 1 boy and three girls. boy name was ronald kroc, girls lin kroc, ashley kroc, and tasha kroc.

The former Dire Straits guitarist and lead vocalist Mark Knopfler released a song about Ray Kroc on his 2004 album Shangri-La. It was inspired by Ray Kroc's autobiography Grinding It Out and the starting of McDonald's, using many of Mr. Kroc's exact words: "Kroc style, boom like that."

References

1. ^ "nndb.com". http://www.nndb.com/people/315/000024243/. Retrieved 2008-10-12. 
2. ^ TIME 100: Ray Kroc
3. ^ http://www.wiley.com/legacy/products/subject/business/forbes/kroc.pdf
4. ^ ^{a b} cf. "Grinding It Out" 1977 by R. Kroc
5. ^ cf. "Grinding It Out" 1977 by R. Kroc, page 123
6. ^ name=arlington
7. ^ http://www.enabledonline.com/BackIssues/Holidays2000/real3.html

External links

• TIME Magazine profile
• Ray Kroc at Find a Grave
• Forbes Greatest Business Stories excerpt

v • d • e McDonald's People Dick and Mac McDonald · Ray Kroc · Charlie Bell · James Richard Cantalupo · Jack M. Greenberg · Jim Skinner · Ralph Alvarez · Fred L. Turner · George Cohon · Don Gorske · Michael R. Quinlan · Joan B. Kroc · Donald N. Smith Products International variations · Big Mac · Big N' Tasty · Kiwiburger · Lean Beef Burger · Quarter Pounder · SuperBeef · Chicken McNuggets · McChicken · McRib · Filet-O-Fish · McMuffin · McGriddles · Happy Meal · Deluxe line · Arch Deluxe · Premium line · Deli Choices Advertising Promotions (McDonald's Monopoly · Teenie Beanies) · Global Gladiators · Golden Arches · M.C. Kids video game · Mac Tonight · Supersize · McDonaldland · McDonald's Sign · McDonald's Treasure Land Adventure · Ronald McDonald · Trademarks · I'm Lovin' It Franchises Canada · Israel Criticism Fast Food Nation (film) · McDonaldization · McJob · McLibel (film) · Super Size Me · The McDonald's Videogame Legal issues Liebeck v. McDonald's Restaurants · McDonald's Restaurants v Morris & Steel Other Urban legends · McDonald's Cycle Center · Rock N Roll McDonald's · McWords · McCafé · McExpress Annual revenue ▲ $22.79 billion USD (2008) · Employees 447,000 (2005) · Stock symbol NYSE: MCD · Website mcdonalds.com

v • d • e San Diego Padres Based in San Diego, California The Franchise History • Expansion Draft • Seasons • Roster • Players • Managers • Division • Broadcasters • Opening Day starting pitchers Ballparks Qualcomm Stadium • Petco Park Spring Training: Desert Sun Stadium • Peoria Sports Complex Culture Swinging Friar • 4SD • San Diego sports curse • The San Diego Chicken • Garvey Home Run • 2007 National League Wild-Card tie-breaker game Key Personnel Owners: Jeff Moorad • John Moores • General Manager: Jed Hoyer • Manager: Bud Black Important Figures Bruce Bochy • Ken Caminiti • Jerry Coleman • Mark Davis • Steve Garvey • Rich Gossage • Sterling Hitchcock • Trevor Hoffman • Rollie Fingers • Tony Gwynn • Randy Jones • Ray Kroc • John Moores • Graig Nettles • Jake Peavy • Gaylord Perry • Benito Santiago • Kevin Towers • Dick Williams • Dave Winfield • Team Hall of Fame Buzzie Bavasi • Nate Colbert • Jerry Coleman • Tony Gwynn • Randy Jones • Ray Kroc • Dick Williams • Dave Winfield Retired Numbers 6 • 19 • 31 • 35 • 42 National League Pennants (2) 1984 • 1998 Division Titles (5) 1984 • 1996 • 1998 • 2005 • 2006 Minor League Affiliates Portland Beavers (AAA) • San Antonio Missions (AA) • Lake Elsinore Storm (A) • Fort Wayne TinCaps (A) • Eugene Emeralds (A) • AZL Padres (Rookie)   Seasons (42) 1960s 1960 • 1961 • 1962 • 1963 • 1964 • 1965 • 1966 • 1967 • 1968 • 1969 1970s 1970 • 1971 • 1972 • 1973 • 1974 • 1975 • 1976 • 1977 • 1978 • 1979 1980s 1980 • 1981 • 1982 • 1983 • 1984 • 1985 • 1986 • 1987 • 1988 • 1989 1990s 1990 • 1991 • 1992 • 1993 • 1994 • 1995 • 1996 • 1997 • 1998 • 1999 2000s 2000 • 2001 • 2002 • 2003 • 2004 • 2005 • 2006 • 2007 • 2008 • 2009 2010s 2010

v • d • e Principal owners of the San Diego Padres franchise C. Arnholdt Smith • Ray Kroc • Joan B. Kroc • Tom Werner • John Moores

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