Ray Kroc – From Milkshakes to McDonald’s

I want to thank Craig Sammells, Country Manager UK & Ireland at ORTHEX, for introducing me to the story of McDonald’s and how a milkshake salesman in his 50s changed the fast-food world forever.  
 
Ray Kroc started life as a milkshake salesman and identified a unique opportunity at age 52. Through incredible persistence and self-belief, he ended up owning McDonald’s. This article by Ryan Trumble gives us an insight into Kroc’s character and determination to succeed.
 
“Luck is a dividend of sweat. The more you sweat, the luckier you get.” — Ray Kroc.
 
In this world, some people just won’t quit, whatever life throws at them. I like to think these people are always rewarded in the end. That’s not always the case, but in this story, it is. Ray Kroc is one of these people.
 
Ray was 52 years old and sold multi-mixers (milkshake machines) to restaurants for a living. He had been a salesperson for over 30 years and had been waiting all his life for an opportunity to present itself.
 
And one day, it came knocking.
 
A restaurant owner in San Bernardino, California, placed an order with Ray for eight milkshake machines. Surprised by such a large order, Ray decided to go and check out the place. Ray was amazed to find the world’s first fast-food venture when he arrived. The sign said “McDonald’s.”
 
Ray met the owners. Two brothers had come up with the concept revolving around two elements: speed and simplicity:
 
Speed: This enhances customer experiences and allows you to differentiate yourself from the competition. It also allows you to operate efficiently, serving the most customers in the minimum amount of time and maximising profits.
 
Simplicity: The McDonald brothers had launched various restaurants before this one and found that most of their sales were concentrated on a few items. They decided to remove everything from the menu except for these, further reducing their costs. This also allowed McDonald’s to differentiate itself from its competitors.
 
Although their business was great, the brothers couldn’t successfully expand. Previous franchising deals had failed because of quality control issues. When Ray saw this business, he instantly saw the potential. He knew the franchise model was the way to go, but it had to be executed properly.
 
After talking the McDonalds into signing a deal with him, appointing him director of franchising, Kroc got to work. His sales experience and personal skills allowed him to get the franchises going. The business grew exponentially as the demand for fast food kept climbing.
 
 
He was barely covering his costs.
 
Nonetheless, Ray wasn’t making money. He had cut a lousy deal with the brothers, and his share of the profits covered his expenses. Thankfully for Ray, Harry Sonneborn, a businessman he met, developed the company’s business model.
 
He advised Ray to buy land and lease it to the franchisees, therefore collecting monthly income through the rent but also taking a share of the franchise’s profits. That was a brilliant idea, and Ray seized it. Harry Sonneborn later became CEO of the McDonald’s corporation.
 
Ray bought the two brothers out in 1961 for 2.7 million dollars; the rest is history.
 
 
What can we learn from the McDonald’s story?
 
Be persistent. No matter how many times you fail, get back up. “Persistence is to man’s character as carbon is to steel.” Napoleon Hill.
 
Be enthusiastic: Ray initially struggled to get people to believe in the project. Fast food was a new concept; as with any innovation, it needed consumer education. Ray’s enthusiasm for the whole idea made the McDonald’s brothers take him on board in the first place. His enthusiasm was what made most of the new franchisees take the leap. People will believe if you strongly believe in what you are selling.
 
Think marketing: The brothers had identified most of McDonald’s key marketing elements. The Golden Arches on the logo were designed to make the restaurant stand out.
But Ray understood the essence of the place. He knew McDonald’s represented something more significant than burgers. It represented America. He sold the dream to his franchisees, who then sold the dream to their customers.
 
Diversification is king: Selling burgers wasn’t going to make Ray rich. Harry devised the solution: buying properties and leasing them to franchisees. That way, they earned revenue from the monthly rent and kept a percentage of the franchisees’ revenue. Diversifying your sources of income allows your business to stay healthy when you face a downturn in one of your streams.
 
Listen to people’s ideas (often better than yours): One of Ray’s biggest strengths is his listening abilities. He recognised that the franchisees had the field knowledge and used their ideas. For example, Ronald McDonald, the Clown, was first implemented by a franchisee in Washington before going worldwide. Listen to people, credit them for their ideas and reap the rewards.

 
To summarise:
 
If you want to succeed, be patient. Ray dedicated 30 years of hard work to thoroughly preparing to seize this opportunity.
 
It is often said that overnight successes take an average of 10 years. Find something you are passionate about and sell it with enthusiasm.
 
Understand the why behind your business and the core values you will put forward through your marketing.
 
And try to diversify your business income streams as much as possible to keep going when things go wrong.
 
 
Thoughts for the week: 

1. Today’s blog makes many fundamental points. Reread it and pick one or two areas to focus on this week.
2. Persistence is a fundamental key to success in any area of life. This week, focus on this and see if you can return to something you have given up on.
3. Ray Kroc was 52 when he began his new journey – it’s never too late to succeed. 

 
Well, that’s it for this week. Have a wonderful weekend, and keep believing.
 
Warm regards

John


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