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Ray Kroc

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Ray Kroc
File:Ray Kroc.jpg
Born
Raymond Albert Kroc

(1902-10-05)October 5, 1902
Oak Park, Illinois, U.S.
DiedJanuary 14, 1984(1984-01-14) (aged 81)
San Diego, California, U.S.
Cause of deathHeart failure
Resting placeEl Camino Memorial Park
San Diego, California, U.S.
OccupationPredominant establisher of the McDonald's Corporation
Political partyRepublican
Spouse(s)Ethel Fleming (1922–1961, divorced)
Jane Dobbins Green (1963–1968, divorced)
Joan Smith Kroc (1969–1984, his death)
Notes

Raymond Albert "Ray" Kroc (October 5, 1902 – January 14, 1984) was an American businessman who joined McDonald's 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, and amassed a fortune during his lifetime. He owned the San Diego Padres baseball team from 1974.[4][5][6]

Early life and career

Kroc was born to parents of Czech origin in Oak Park, near Chicago, on October 5, 1902. His father originated from the village Břasy near Plzeň, Bohemia (now the Czech Republic). He grew up and spent most of his life in Oak Park, Illinois. During the First World War he lied about his age and became a Red Cross ambulance driver at 15.[7][8][9] During the war, Kroc served in the same regiment as Walt Disney. 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 radio DJ at Oak Park radio station WGES.[10] At one time, Ray worked for room and board at one of Ray Dambaugh's restaurants in the midwest to learn the restaurant business. Years later, he returned the favor by coming to Ray Dambaugh's funeral in Evans City, Pennsylvania to pay his respects. He eventually became a multi-mixer milkshake machine salesman, traveling across the country.

McDonald's

With Prince Castle Multi-Mixer sales plummeting because of competition from lower-priced Hamilton Beach products, Ray took note of the McDonald brothers who had purchased 8 of his Multi-Mixers. Immediately after visiting the San Bernardino store, Ray became convinced that he could sell mixers to every new franchise restaurant that they opened, and so he offered his services to the McDonald brothers who were looking for a new franchising agent following the departure of agent Bill Tansey due to health issues.

Kroc eventually became frustrated with the brothers' willingness to accept their chain having only a handful of restaurants. In 1961, he bought the company for $2.7 million (enough to pay each brother $1 million each after taxes), plus an overriding royalty of 1.9% on gross sales to the McDonalds. (When negotiating the contract the McDonald brothers said that 2% sounded greedy; 1.9% was more attractive.)[10]

The agreement was a handshake with split agreement between the parties because Kroc insisted that he could not show the royalty to the investors he had lined up to capitalize his purchase. At the closing table, Kroc became 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 Kroc 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. Kroc 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.[11]

After finalizing the agreement with the McDonald Brothers, Kroc sent a letter to Walt Disney. (They had met as ambulance driver trainees at Sound Beach, Connecticut.) Kroc wrote, "I have very recently taken over the national franchise of the McDonald's system. I would like to inquire if there may be an opportunity for a McDonald's in your Disney Development." Disney agreed under stipulation to increase fries from ten cents to fifteen cents allowing himself the profit. Kroc refused to gouge his loyal customers leaving Disneyland to open without a McDonald's restaurant.[8]

Kroc maintained the assembly line "Speedee Service System" for hamburger preparation, which was introduced by the McDonald brothers in 1948. He standardized operations, ensuring every Big Mac would taste the same in New York or Tokyo. He set strict rules for franchisees on how the food was to be made, portion sizes, cooking methods and times, and packaging. Kroc also rejected cost-cutting measures like using soybean filler in the hamburger patties. These strict rules also were applied to customer service standards with such mandates that money be refunded to clients whose orders were not correct or to customers who had to wait more than 5 minutes for their food. However, Kroc let the franchisees decide their best approach to marketing the products. For example, Willard Scott created the figure now known internationally as Ronald McDonald to improve sales in the Washington, D.C. metropolitan area.

Quotes

  • Kroc defined salesmanship as “the gentle art of letting the customer have it your way."[citation needed]
  • "If you have time to lean, you have time to clean," was a common reproach to idle employees.[citation needed]
  • "I was an overnight success all right, but 30 years is a long, long night."[citation needed]
  • "The organization cannot trust the individual; the individual must trust the organization."[citation needed]
  • "It's easy to have principles when you're rich. The important thing is to have principles when you're poor."[citation needed]
  • "Luck is a dividend of sweat. The more you sweat, the luckier you get."[citation needed]
  • "It isn't fast food if you have to wait. Wait more than 5 minutes, then the food should be free." (Fortune Magazine, July/1977)
  • "Everyday, I go into a shop, try and catch someone doing something good, and I tell him."[citation needed]
  • Kroc popularised the mantra "In business for yourself, but not by yourself" and successfully balanced the need for central control over franchisees, ensuring that they followed a rigid, proven formula, with the need to empower restaurant owners to suggest improvements to the business model.[12]

Personal life

Kroc's foundation supported research and treatment of alcoholism, diabetes, and other diseases. He established the Ronald McDonald House foundation. He was a major donor to the Dartmouth Medical School.[13]

In 1972 Senator Harrison A. Williams Jr. (Democrat - NJ) suggested Kroc's contributions of over $200,000 to Richard M. Nixon's re-election campaign influenced the White House's policy on wages for teenage workers.[13]

Kroc died of heart failure at Scripps Memorial Hospital in San Diego, California, on January 14, 1984 at the age of 81. He left a widow, Joan. His previous marriages, to Ethel Fleming (1922–1961) and Jane Dobbins Green (1963–1968), ended in divorce.[2][5]

Kroc's purchase of McDonald's is the basis for Mark Knopfler's song "Boom, Like That", from his 2004 album Shangri-La.[14]

See also

References

  1. ^ "Ray Kroc". Newsmakers (Fee, via Fairfax County Public Library). Detroit: Gale Biography In Context. 1985. ISBN 1618001946. Gale Document Number: GALE. Retrieved 2011-06-12 June. {{cite book}}: Check |isbn= value: checksum (help); Check date values in: |accessdate= (help)
  2. ^ a b Cicarelli, James (2003). "Ray Kroc". Scribner Encyclopedia of American Lives, Thematic Series: Sports Figures (Fee, via Fairfax County Public Library). New York: Charles Scribner's Sons. Retrieved 2011-06-12. {{cite book}}: Unknown parameter |editors= ignored (|editor= suggested) (help) Gale Biography In Context.
  3. ^ Anderson, Robert (March 2009). "Ray Kroc How He Made McDonald's Sizzle". Success. Retrieved 2011-06-13. (excerpt from September 1977 article)
  4. ^ Gross, Daniel (1996). "Ray Kroc, McDonald's, and the Fast-Food Industry". In Daniel Gross (ed.). FORBES GREATEST BUSINESS STORIES OF ALL TIME (PDF). Wiley. pp. 177–192. ISBN 0471143146. LCCN 96034245. Retrieved 2011-06-13.
  5. ^ a b "Ray Kroc". nndb.com. Retrieved 2008-10-12.
  6. ^ "TIME 100 Persons Of The Century". Time magazine. June 14, 1999. Retrieved 2011-06-13.
  7. ^ "Raymond Albert Kroc". Gale Encyclopedia of U.S. Economic History (fee, via FCPL). Detroit: Gale Biography In Context. 1999. ISBN 1667000109. Gale Document Number: GALE. Retrieved 12 June 2011. {{cite book}}: Check |isbn= value: checksum (help)
  8. ^ a b Schlosser, Eric (2002). [[Fast Food Nation: The Dark Side of the All-American Meal]]. New York, NY: Harper Collins Publishers. ISBN 9780395977897. {{cite book}}: URL–wikilink conflict (help)
  9. ^ Pepin, Jacques (December 7, 1998). "Burger Meister Ray Kroc". TIME Magazine. Retrieved 2011-06-13.
  10. ^ a b Kroc, Ray; Anderson, Robert (1992). Grinding it out: the making of McDonald's. Macmillan. ISBN 9780312929879.
  11. ^ Kroc (1977). Grinding It Out. p. 123.
  12. ^ "McDonald's franchise: Ray Kroc". London: Dynamis Plc. Retrieved 2011-06-13.
  13. ^ a b Pace, Eric (January 15, 1984). "Obituary: Ray A. Kroc dies at 81; Built McDonald's Chain". New York Times. Retrieved 2011-06-12.
  14. ^ Hansen, Liane (July 24, 2005). "Mark Knopfler, Discovering 'Shangri-La'". National Public Radio. Retrieved 2011-06-13.

Further reading

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