Ray Kroc, Who Was He? The Man Behind The Success Of McDonald’s

He was born on October 5, 1902, and died on January 14, 1984.

As a businessman, Kroc is recognized for his success in the United States after he purchases McDonald’s in 1961. After purchasing the fast food company, Kroc was its CEO until 1973.

Ray Kroc is credited with being responsible for the company’s success and global expansion, making it the most successful fast-food corporation in the world.

Because of the success and impressive growth of the company under his stewardship, Kroc has also been recognized as the true founder of McDonald’s. After his retirement as CEO of McDonald’s, Kroc took possession of the San Diego Padres, a Major League Baseball team in the United States.

Ray Kroc’s early years

Kroc was born on October 5, 1902, in Oak Park Illinois, near Chicago. He was the son of Rose Mary (née Hrach) and Alois “Louis” Kroc, both Czech-Americans.

Kroc’s father, Alois, was born in Horní Stupno, a municipality near Brasy in the Czech Republic. Rose’s parents and grandparents were also from what is now the Czech Republic.

After migrating to the United States, Alois made a fortune speculating in real estate during the 1920s. However, he lost everything during the crisis of 1929.

Ray Kroc grew up and spent most of his life in Oak Park. During World War I, he lied about his age so he could become an ambulance driver at the age of 15, along with Walt Disney.

Despite enlisting as ambulance drivers during the war, the war ended shortly after Kroc and Disney enlisted as drivers.

During the Great Depression, Kroc worked at a variety of jobs, selling disposable cups, as a real estate agent in Florida, and sometimes playing piano in marching bands.

Developing and buying McDonald’s

After World War II, Kroc found employment as a milkshake machine salesman for the Prince Castle food service equipment company.

When Prince Castle’s sales tanked due to competition from Hamilton Beach, Kroc was impressed by the work of brothers Richard and Maurice McDonald, who had purchased eight of the milkshake machines for their restaurant in San Bernardino, California in 1954.

The movie Hungry for Power tells how Kroc struggled to convince the McDonald brothers to expand the fast food business by opening several franchises.

Despite the objections of Mcdonald’s, they soon saw an opportunity for growth with Kroc and decided to execute the franchise plan.

McDonald’s tries to enter the Disney parks

After finalizing the deal with the McDonald brothers, Ray Kroc sent a letter to Walt Disney. They had met as trainee ambulance drivers in Old Greenwich, Connecticut during World War I.

Kroc wrote to Disney: “I recently acquired the national McDonald’s franchise system. I’d like to ask if there might be an opportunity for McDonald’s in your Disney development.”

According to a record, Disney agreed to Kroc’s business proposal but on the condition that it increases the price of the fries from ten cents to fifty cents, which would leave him a handsome profit.

However, Kroc refused Disney’s terms, staying loyal to his customers, thus leaving Disneyland without a McDonald’s restaurant.

Writer Eric Schlosser wrote in his book “Fast Food Nation” that he believes this record is an embellished version of events. Most likely, Schlosser points out, Kroc’s proposal was never answered by Disney.

Radical changes at McDonald’s

Kroc has been singled out as being responsible for making major changes and innovations in the fast food service franchise model.

One of the main changes was the sale of a single franchise store instead of selling large territorial franchises with multiple stores. At the time Kroc acquired McDonald’s, it was common for company franchises to be sold into large territorial business units.

Kroc recognized that selling exclusive licenses to large markets was the fastest way for the franchisor to make money. But he also saw in this practice the loss of the franchisor’s ability to exercise control over the course and direction of the food chain’s development.

On top of all this, and in keeping with contractual obligations to the McDonald brothers, Kroc wanted consistency in service and quality across all McDonald’s stores.

Without the ability to influence the franchises, Kroc knew this goal would be difficult to achieve.

For all of these reasons, by granting a franchise the right to own a single store, Kroc retained for the company some control over the decisions of individual restaurants.

Ray Kroc Policies on McDonald’s Development

Ray Kroc’s policies for McDonald’s included establishing locations in suburban areas.

The construction of restaurants was not allowed in central and urban areas since the poorest residents could sneak into the stores after sales hours to sleep there.

Restaurants had to be kept completely sanitized at all times and properly tidy, and employees had to be clean.

Other policies included that the food had to be ready and standardized beforehand, and restaurants could not go outside the specifications in any way. Nothing was to be wasted, Kroc insisted, every container of food left completely clean. Likewise, gaming machines or cigarette vending machines were not allowed in any McDonald’s restaurant.

Other companies copy the McDonald’s model

During the 1960s, a wave of new fast-food chains appeared, copying the McDonald’s model. Among the new companies were Burger King, Burger Chef, Arby’s, KFC, and Hardee’s.

This wave of new franchise growth continues to this day and has included competitors from many different types of food, including Domino’s Pizza and Subway.

Ray Kroc’s fight for the growth of McDonald’s

Ray Kroc found himself at odds and frustrated with the McDonald brothers. They wanted a small number of restaurants, and Kroc wanted to grow across the United States.

The McDonald brothers consistently told Kroc that he couldn’t make changes to things that had the distinctive, original McDonald’s imprint. Thus, despite Kroc’s constant pleas, the brothers never sent the formal letters that legally permitted the network changes.

In 1961, Kroc bought the company for an estimated $2.7 million, calculated so that each brother would receive $1 million after taxes.

Obtaining the funds for the purchase was difficult for Ray Kroc due to the large debt that had resulted from the company’s expansion. Still, Harry Sonneborn, whom Kroc referred to as a “financial genius,” was able to raise the necessary funds for the purchase.

After the deal closed, Kroc was impressed by the fact that the brothers did not want to transfer the rights and land from the main location in San Bernardino. The brothers said that they had given ownership, operation, and everything else to the founding employees.

In a fit of rage, Kroc opened a new McDonald’s restaurant near the original restaurant, which had been renamed “The Big M” because the brothers had neglected to maintain the naming rights. “The Big M” closed a few years after Kroc’s purchase of McDonald’s.

What was left for the McDonald brothers after the purchase of the company?

As part of the purchase agreement, Kroc is alleged to have promised, based on an informal agreement, to continue to give a 1% annual royalty to the McDonald brothers. However, there is no evidence for this beyond a claim made by a nephew of the McDonald brothers.

Neither brother expressed disappointment with the deal publicly. Speaking to someone about the purchase, Richard McDonald allegedly said that he had no regrets.

Based on these statements, it can be said that the brothers only had $1 million each left. McDonald’s would become a multi-thousand dollar company over the years and one of the largest companies in the United States.

Today McDonald’s is one of the thirty companies that make up the Dow Jones Industrial Average.

Roy Kroc and the final boost to McDonald’s after its purchase from the McDonald brothers

Kroc maintained the “Quick Service System” assembly line for hamburger preparation that was introduced by the McDonald brothers in 1948. Ray Kroc standardized operations, ensuring that every burger was the same at every restaurant.

In the same way, Kroc established strict rules for the franchises. The way food was served, portion sizes, cooking methods, times, and packaging all had to be standardized.

Ray Kroc also rejected money-saving measures like the use of soy filling in burgers. These strict rules were applied to customer service standards with mandates stating:

• The money had to be returned to the clients in the cases in which the orders served were not the correct ones and,

• They had to wait more than five minutes for their food.

By the time Kroc died, the chain had 7,500 restaurants in the United States and in 31 other countries and territories. The total restaurant sales system generated more than 8 billion dollars in 1983. Ray Kroc’s personal fortune was also 600 million dollars at that time.

McDonald’s currently has a market capitalization of $185 billion and annual revenue of $22 billion. Annual sales for 2021 were $112.5 billion.

Ray Kroc in the world of Baseball

Kroc retired from McDonald’s in 1973 to seek new challenges in the corporate world.

So that same year he decided to return to baseball which was his favorite sport. Just in 1973, he found out that the San Diego Padres, a national league baseball team, was for sale, so he decided to buy it.

The equipment had initially been conditionally sold to Joseph Danzansky, a Washington supermarket chain owner who planned to move the equipment to Washington. However, the sale was tied to legal conditions when Kroc bought the team for $12 million and promised to keep it in San Diego.

In the team’s first year under Kroc’s ownership, the Padres lost 102 games, yet still drew more than a million fans, the standard for major league box office success during the era. The team’s previous peak attendance was in 1972 when it drew 644,772 fans. The San Diego Union-Tribune, a local newspaper, said Kroc was above all a fan of his team.

On April 9, 1974, as the Padres were about to lose 9-5 to the Houston Astros in the season opener at San Diego Stadium, Kroc took the microphone to deliver a public address in front of 39,000 fans. . Krok said, “I’ve never seen such a stupid ball game in my life.” The crowd chorused and cheered in approval.

Ray Kroc retires from baseball

In 1979 Kroc’s interest in future free agent players, Graig Nettles and Joe Morgan led to a $100,000 fine from Commissioner Bowie Kuhn. Frustrated with the team, Kroc turned the operations over to his son-in-law, Ballard Smith.

Faced with his failure in the world of baseball, Ray Kroc declared: “There is more future in hamburgers than in baseball.”

After Kroc’s death in 1984, San Diego Padres players wore a special patch bearing Kroc’s initials, RAK.

That same year, they won the National League pennant and played in the 1984 World Series, which they lost to the Detroit Tigers. Kroc was posthumously inducted as part of the inaugural class of the San Diego Padres Hall of Fame in 1999.

Ray Kroc’s philanthropic actions

Throughout his life, Ray Kroc distinguished himself by his philanthropic actions, most notably through the Kroc Foundation, through which he sponsored research, treatment, and education on various medical conditions.

Among the diseases to which the Kroc Foundation directed its research support are alcoholism, diabetes, arthritis, and multiple sclerosis.

Kroc is also known for establishing the Ronald McDonald House, a nonprofit organization that provides free lodging for parents near medical facilities where their children are receiving medical treatment.

In 1973, Ray Kroc received the Golden Plate Award from the American Academy of Achievement.

political positions

As a lifelong Republican, Ray Kroc was a strong believer in personal independence and vehemently opposed New Deal welfare programs.

Ray Kroc donated $225,000 to Richard Nixon’s campaign for re-election in 1972 and was controversially accused by some, notably Senator Harrison Williams, of making the donation to influence Nixon to veto the minimum wage bill so it would not pass. in Congress.

Ray Kroc’s personal life

Kroc’s first two marriages, first to Ethel Fleming (1922-1961) and then to Jane Dobbis Green (1963-1968), ended in divorce.

Kroc and Fleming met in 1919 and soon fell in love before marrying in 1922, later moving to Chicago, Illinois. They had their daughter Marilyn in 1924.

Kroc’s third wife was a philanthropist, Joan Kroc, who notably increased her donations after Kroc’s death. Ella Joan donated to a variety of causes she cared about such as peace and nuclear non-proliferation.

After her death in 2003, Joan’s $2.7 billion fortune was distributed among various charities. A $1.5 billion donation was made to the Salvation Army (Evangelical organization) to build 26 Kroc Community Centers. Also donating $200 million to National Public Radio, Joan was a strong believer in the power of public radio.

In addition to all of this, Joan Kroc also donated money to community centers serving neighborhoods neglected by the government and states across the country.

Death of Ray Kroc

In 1989, after a heart attack, Kroc entered an alcohol rehabilitation center. He died four years later of heart failure in a San Diego, California hospital on January 14, 1984, at the age of 81. Ray Kroc was buried in “El Camino Memorial Park” in Sorrento Valley, in San Diego.

Ray Kroc in popular culture

Kroc’s acquisition of the McDonald’s franchise as well as his unique business tactics were the subject of Mark Knopfler’s 2004 song “Boom, Like That.”

Ray Kroc co-authored the book “Grinding It Out,” which was first published in 1977 and republished in 2016. Ray’s book served as the basis for the film about Kroc’s success with McDonald’s.

Michael Keaton portrayed Ray Kroc in the 2016 John Lee Hancock film The Founder. In Spanish, the film was titled Hunger for Power. The film traces Kroc’s development of the franchise, national expansion, and eventual acquisition of McDonald’s, offering a critical perspective on Kroc’s treatment of the McDonald brothers.

Ray Kroc is featured in the documentary series “The Food That Built America” ​​on the History Channel.

Likewise, Kroc is also featured in Tim Harford’s BBC News Service program 50 Things That Built Modern America in the episode “Fast Food Franchise,” which depicts the boom of his franchise model and what it meant for the fast food industry.

Ray Kroc’s Legacy

According to Ray Kroc’s autobiography “Grinding it out” (which could be translated as “breaking it”), Kroc stated that in his later years, he had struggled with medical problems such as alcoholism and diabetes.

As he neared the end of his life, with all these health problems, Kroc continued to work full-time and was seen in the office every day.

In October 1975, Kroc was hospitalized for heart problems, which had been a constant throughout his adult life.

In Grinding it out he wrote “My mind is constantly working, and when my body doesn’t accommodate what my mind is doing, then it gets frustrating. I constantly have new ideas for McDonald’s and it’s just a matter of how efficiently I can bring those ideas to life. Only time will make me stop working for this company.”

So following his biography and the historical and global importance acquired by the McDonald’s restaurant chain, we can say that Ray Kroc’s great legacy is precisely this company.

The original vision and the tenacity that accompanied it are today more visible than ever in the world.

More than half of the workers then living in the United States today got their first job at McDonald’s. This in itself is a testament to the ingenious system Kroc put in place that allowed him to make constant changes to his employee base. This strategy is still in force in almost all fast-food chains today.

The scale of McDonald’s growth

McDonald’s growth has been truly impressive. 10 months after Kroc’s death in 1984, McDonald’s sold its 50 billionth hamburger. As of April 30, 2010, McDonald’s had sold 247 billion hamburgers. This is almost the equivalent of 31 hamburgers for every human being alive on earth today.

Ray Kroc’s unique vision for McDonald’s and the efficiencies he promoted allowed McDonald’s to become one of the greatest companies of all time. McDonald’s continues to grow even today.

In Sara Gilbert’s book “The Story of McDonald’s,” she writes, “But while fast-food franchises were being gobbled up by large corporate conglomerates, McDonald’s stayed true to its business principles. As the fast food landscape has changed, a commitment to quality and customer service has been part of the business from the beginning and has come to be its greatest strength.”

Ray Kroc Business Values

Ray Kroc’s values ​​and qualities have been reflected in the company and have been amplified to the world revolutionizing the food business.

Among Ray Kroc’s most famous values ​​are quality, service, process line standardization, and value.

Kroc once said, “If you gave me a brick for every time I say Quality, Service, Standardization, and Value, I’d probably be able to build a bridge across the Atlantic Ocean with them. He has imbued the company with these principles and they are still alive at McDonald’s and many other companies.

For better or worse, Ray Kroc’s innovations and strong integrity have revolutionized the fast-food business around the world and changed cultures everywhere.

Kroc’s original vision for restaurants as a factory has led McDonald’s to grow as the seventh most profitable company in the world by 2012.

Kroc’s unprecedented management tactics in both marketing and expansion have influenced every other food chain today and become an essential part of American culture, even within other cultures.

With information from Wikipedia and McKroc.