7 Juicy Business Lessons From McDonald’s ‘Founder’ Ray KrocHow the subject of a new biography and a film starring Michael Keaton struck gold in the Golden Arches.
Just about everybody knows the company he created, but few people may recognize his name. That may change this month when “The Founder,” a bio pic of Ray Kroc, the man behind McDonald’s, begins to arrive in movie theaters, with Michael Keaton in the title role.
One of the great success stories of the 20th century, Kroc (1902-1984) was a man of hard-charging ways and a fiercely competitive ethic. Asked about his competitors, he was once quoted as saying, “If they were drowning to death, I would put a hose in their mouth.”
Yet, whatever Kroc’s flaws, he sure knew how to build a business. Part of his secret may have been that no matter how big McDonald’s became, he still approached it much like a small business, noted Lisa Napoli, author of “Ray & Joan,” a joint biography of Kroc and his third wife, released in November. “He picked up the trash in the parking lots and policed the bathrooms fastidiously.”
What can today’s business owners learn from the great burger baron? Here are seven lessons from the life of Ray Kroc.
1. You don’t have to be 20 to be an entrepreneur. Ray Kroc was a 52-year-old milkshake mixer salesman when he discovered a busy San Bernardino, California, hamburger stand run by two brothers named McDonald and had the idea to take their concept nationwide. Before that, he’d sold everything from paper cups to Florida swampland and made money on the side playing piano for a Chicago-area radio station.
2. Try to keep ego out of it. While never lacking in self-confidence, Kroc also knew when to back away from the spotlight. For example, the notion of naming his restaurant chain after himself seems never to have occurred to him, or if it did, he quickly dismissed it.
As Kroc recalled in his 1977 autobiography “Grinding It Out,” written with Robert Anderson, one reason he partnered with the McDonald brothers was simply to get their surname. “I had a strong intuitive sense that the name McDonald’s was exactly right,” he wrote.
3. Be open to others’ ideas. The Big Mac was the brainchild of a Pittsburgh McDonald’s operator. The Shamrock Shake came from one in Connecticut. The Egg McMuffin was invented by a California operator and named by the wife of a McDonald’s executive.
The idea for the Filet-O-Fish sandwich came from an operator in Cincinnati, and a crew member there suggested adding a slice of cheese. Kroc initially opposed putting fish on the menu but came around when he saw the sales figures. He had also pared the cheese to a more economical half slice.
4. Don’t be wedded to your own ideas. Kroc had no trouble abandoning failed experiments, even his own. The classic example was his Hulaburger, a sandwich that consisted of a slice of grilled pineapple and two slices of cheese on a toasted bun. He remembered one customer’s reaction: “I like the hula but where’s the burger?” Kroc soon bid the Hulaburger aloha.
Kroc’s attempt to create an upscale hamburger chain called Ramond’s also fizzled after he’d opened just two outlets. “They didn’t take hold, so I cut our losses and got out,” he recalled. Ditto for an ill-fated attempt to sell roast beef.
5. Never stop innovating. Although the McDonald brothers had a state-of-the-art operation, Kroc continued to invest in making it more efficient.
McDonald’s opened an R&D lab in 1961. Its first innovation was a computer to time the blanching of French fries and ensure their consistent color. Another invention squirted precise amounts of ketchup and mustard on every hamburger patty. Still another, the Fatilyzer, allowed store operators to quickly check meat deliveries and reject any batch of burger that exceeded the chain’s 19 percent limit on fat content.
6. Give your people autonomy — but don’t overdo it. “I believe that if you hire a man to do a job, you ought to get out of the way and let him do it,” Kroc professed in “Grinding It Out.” Indeed, the growth of McDonald’s owed as much to the sharp executives Kroc hired as to the man himself, Napoli noted.
But his faith in decentralized authority didn’t keep him from closely monitoring the daily sales figures of every McDonald’s outlet or from paying unannounced visits to make sure they were following the rulebook. Woe to the operator with soggy fries or a litter-strewn parking lot when Kroc came to call.
7. Be persistent. In the closing chapter of “Grinding It Out,” Kroc quotes what he calls his favorite homily: “Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.”
Though the quote is generally attributed to Calvin Coolidge, Napoli notes that Kroc used it so often that “people begin to attribute Coolidge’s words to Ray.”
Given Kroc’s record, it’s little wonder.