He didn't cook McDonald's burgers, but he made McDonald's a world brand: Ray Kroc

“We are selling the world's most delicious hamburger for 15 cents. No hassle of waiting in line, no obligation to tip.”

That's what it said inside the little restaurant he entered.

Ray Kroc knew every type of restaurant in the country, having traveled throughout the United States selling milkshake machines. But it was the first time he had seen such.

This event took place in 1954. In other words, 14 years after the McDonald brothers opened their small restaurant in California... Let's take a look at the success story of McDonalds, one of the world's largest fast food restaurant chains:

When and How Was McDonald's Founded?

Richard and Maurice McDonald started the fast food business in 1940. However, they did not earn much for 8 years. After 8 years, production started to be automated. In other words, the maximum number of hamburgers started to be produced with minimum effort. They removed the waiters, tables and chairs from the restaurant. People were now lining up outside in front of a window and ordering. By keeping all costs down as much as possible, the Donald brothers did not compromise on quality. Richard McDonald said: “Our concept is about speed, low price and volume. As we keep prices low, our number of customers increases, and moreover, customers take care of their own business.”

By 1954, the McDonald brothers opened 10 more restaurants, but these restaurants did not do much business. (Don't think of McDonald's branches when you say restaurants. In the past, people only bought hamburgers and cokes. So there was no place to sit in these restaurants.)

Ray Kroc stepped in

That's where Ray Kroc from Illinois stepped in. A visionary and bold marketer, Kroc was an entrepreneur who always liked to play big. Kroc, who sells milkshake machines and is also a real estate agent in Florida, has always wanted to be number one in his business. Explaining his franchising idea to the McDonald brothers, Kroc said:

“The idea of ​​having hundreds of McDonald's on the side of the country's highways excites me.”

However, the McDonald brothers did not initially take kindly to his idea. Because they were earning well in their branches in California. One branch was enough for them. However, Kroc insistently insisted that he would be personally active in the opening of new branches, and that they would just sit down and look at their money. The McDonald brothers, who could not stand the insistence, accepted his offer.

Kroc grew the business

Ray Kroc, who started preparations immediately, decided to establish a model branch before starting the franchise sale. He and a friend opened a joint branch in Chicago in 1955. Like the California branch, it was essential that this place save time and money. Even the design of fryers, pans was critical to keep costs down. But most of all Kroc was very meticulous about the quality of the food. Especially french fries were loved by people. It was almost as if people were going to McDonalds to buy french fries.

Although the Chicago branch was not earning as well as the California branch, it was still making money from day one. That's why many people were applying to Kroc for dealership. Within a year, 11 McDonald's branches were opened across the USA. The following year, 25 more branches were opened.

Entered real estate business

In accordance with the agreement with the McDonald brothers, Kroc received a share of 1.9% from the total profit, while 25% of the earnings of the other dealers went to the McDonald brothers. This rate could be even better. Harry Sonneborn, the finance manager of the company that started the initiatives for this, suggested the idea of ​​buying the shops where the dealers were opened and renting them to the dealers again. A company was opened under the name Franchise Realty Corporation in 1956 and this company operated as the shopkeeper of McDonald's businesses. Over time, McDonalds' profit rate has increased tremendously through the increase in rents.

In 1959, the company wanted to open about 10 restaurants in its own name. In other words, it was desired to open 10 more restaurants directly affiliated with McDonalds, apart from the franchises it gives franchises to. For this, a loan of 1.5 million dollars was obtained in exchange for 22.5% of the company's shares. Thanks to this loan, the company's growth trend continued solidly throughout the 1960s.

Ray Kroc bought McDonalds

Despite the rents and income from these restaurants, Kroc was not very happy with the deal with the McDonald brothers. He made an offer to buy the company in 1961 and bought McDonalds for $2.7 million. Although Kroc found this price excessive, he made the best investment of his life.

Although Ray Kroc left the CEO position in 1968, he continued to be active in the company. Despite the economic turmoil of the 1970s, he suggested the company's growth. In fact: “Why don't you try growing when everything is cheaper?” He is said to have even shouted to company management.

When Kroc died in 1984, there were more than 8,000 McDonald's branches in 32 different countries.

What is the secret of this success?

So how did McDonald's become so successful, except for good management and a bit of luck? When we examine the history of the company, three main points stand out: Franchising model, efficiency and customer satisfaction.

If you have a good brand and a good business model, franchising is an option that almost every company enjoys. You offer the name, image, product and quality of your company to the dealers and then you make money from it. Moreover, there is no need for much capital to develop a business suitable for the franchising model. This makes this model more attractive.

While Ray Kroc was in charge, McDonald's set the standards and created a decentralized entrepreneurship environment.

The franchising model was the main focus for McDonald's from day one. Here's what Kroc says about it:

“Our company is focused on hamburger restaurants and lives off the energy of restaurant owners. We are a group of small businesses. If we provide convenience to these businesses, we will reap the fruits of this more easily.”