The definition of salesmanship is the gentle art of letting the customer have it your way.
We have found out... that we cannot trust some people who are nonconformists... We will make conformists out of them... The organization cannot trust the individual; the individual must trust the organization.
Ray Kroc
Founder*, McDonald's
October 5, 1902 - January 14, 1984
Ray Kroc was the founder of the McDonald's Corporation, which took a small chain of fast food restaurants owned by the McDonald's brothers and turned them into a global fast food phenomenon.
A Biography of Ray Kroc
Ray Kroc was born in Oak Park, Illinois, on October 5, 1902. He grew up in what would best be described as an early suburban neighborhood with thoughtful, hard working parents. In 1917, Ray lied about his age (he was only 15) and joined the Red Cross in order to help out with World War I. He was sent to Connecticut for training, but he never reached active combat. So, when the war ended, he spent the next few years traveling around the country, mostly playing the piano and working odd jobs.
In 1922, Ray got a job as a salesman for the Lily Tulip Cup Corporation, which turned out to be his entry into the world of commerce. Ray would spend his days selling cups and his evenings meeting businessmen at clubs and restaurants where Ray would play the piano. Ray contined with this routine until the mid-1930s, when he met Earl Prince, who was the inventor of a five spindle multimixer (a semi-automated machine for making milkshakes). Due to the success of the machine, Prince was buying great quantities of Lily cups, which Ray was happy to sell to Prince.
Meanwhile, in mid 1940 Mac and Dick McDonald opened a barbecue restaurant in San Bernadino, CA. This restaurant has little connection to the McDonald's of today, other than the fact that it was called McDonald's. The place featured sit-down dining, much more comparable to a Sambo's or a Denny's than to a modern McDonald's. The items on the menu included barbecued ribs (the original McRib, perhaps?) and beef and pork sandwiches, and later, hamburgers.
Ray, on the other hand, eventually became a salesman for Prince Castle Multimixers in the 1940s in southern California. Ray entered into an agreement with Earl Prince which allowed Ray exclusive rights to marketing the mixer, which allowed Ray quite a lot of leverage in salesmanship of the device. Although he was making a decent amount of money at this business, it seemed that, when Ray turned 50 in 1952, that he would ride slowly off into the sunset.
But things were about to turn around for Ray...
In 1948, the McDonald brothers closed their burger restaurant for several months and set about "modernizing" the place based upon principles of speedy service they had learned about during a series of seminars. In late 1948, the place re-opened and was called McDonalds "Speedee Shakes and Burgers." This restaurant featured many of the traits of the modern McDonald's restaurants, as the restaurant focused on a small menu of burgers, fries, and milkshakes while delivering them quickly and at a minimal cost to the customer. Many of the devices used in the process were very simple to operate, enabling the McDonald brothers to employ inexpensive labor to help run the restaurant. Business boomed, and the brothers opened a small number of additional restaurants in 1953 and 1954.
When the McDonald brothers ordered eight milkshake machines at the same time from Ray Kroc, he knew something interesting was happening. In the early spring of 1954, Ray visited McDonalds Speedee Shakes and Burgers ... and the place was packed. Knowing a good thing when he saw it, Ray negotiated with the McDonalds to open more restaurants so that Ray could sell more milkshake machines. When the brothers seemed resistant to the idea (mostly because they were happy with the small local chain, which was earning them a great deal of money at the time and was able to be managed by just the two brothers), Ray offered to run the additional restaurants for them. A deal was struck, and Ray agreed to become the official franchiser for the McDonald's restaurant chain for the next ten years.
In 1955, Ray founded McDonald's System, Inc. and opened the first chain restaurant in Des Plaines, IL. With this first step, Ray began to understand the process of franchising, and thus developed a model that would allow relatively low-income individuals to purchase a McDonald's franchise.
In 1956, Ray founded the Franchise Realty Corporation, which in the estimation of many was Ray's real ingenious move. The corporation, which became a McDonald's subsidiary in the early 1960s, would purchase real estate in markets where a McDonald's would seem to be a good fit, then lease or rent the land at a reasonable rate to new franchisees. This would enable people interested in a restaurant to obtain a franchise and the land to build it on quickly and relatively cheaply. By 1960, there were more than 200 McDonald's franchises in existence.
By 1961, Ray and the McDonald brothers were repeatedly butting heads about the direction of the McDonald's chain. The largest reason for the disagreement was that the McDonald brothers would often demand to review each corporate decision, then take their time deciding whether to approve it or not, whereas Ray felt that the business needed to move forward rapidly. The two sides reached an agreement, and Ray bought the McDonald's name lock, stock, and barrel from the brothers for $2.7 million.
It is ridiculous to call this an industry. This is not. This is rat eat rat, dog eat dog. I'll kill 'em, and I'm going to kill 'em before they kill me. You're talking about the American way -- of survival of the fittest.
In the agreement between Ray and the McDonald brothers, the brothers were allowed to keep their original San Bernardino restaurant. Ray, however, wanted to make sure that the brothers would never come back to haunt him, so he took action to make sure their restaurant wouldn't be a success. First, Ray forced the brothers to change the name of their restaurant; the restaurant became known as The Big M. Then, less than a year after the split between Ray and the brothers, Ray opened a McDonald's franchise just a block away from The Big M, purposely driving the McDonald brothers out of business. Why would he do this? Ray was single-minded and extremely driven, and he did not want to lose, ever. It was this bloodthirsty attitude that would make McDonald's explode in the next two decades.
Ray's philosophy was that a ubiquitous, family-friendly, clean, and inexpensive dining experience would bring in families by the thousands to buy hamburgers, and Ray was absolutely right. By 1962, the chain had sold one billion hamburgers, and in 1977, just sixteen years after Ray acquired the business, McDonald's had 4,200 stores in the United States and the total sales exceeded $3 billion.
Ray used his wealth in several interesting ways. Among Ray's expenditures were a $250,000 donation to Richard Nixon's 1972 presidential campaign, after which a bill attempted to pass Congress suggesting a 20% reduction in minimum wage for teenagers (of which McDonald's employs many). In early 1974, Ray purchased the San Diego Padres to prevent them from leaving San Diego for Washington, D.C.; he spent years attempting to build a winner out of the Padres and was very angry at their failures. During the eighth inning of their first home game of the 1974 season against the Houston Astros, Ray got on the public address system and told the crowd: "Ladies and gentlemen, I suffer with you... I've never seen such stupid baseball playing in my life." After this outburst, baseball commissioner Bowie Kuhn ordered Ray to apologize to the fans.
Ray Kroc passed away in early 1984, leaving behind a timeless legacy of singlehandedly inventing an industry -- or at least transforming it from a small-time market into an international phenomenon.
In October 1984, the San Diego Padres went to the World Series.
Sources
TIME Magazine; September 17, 1973; "The Hamburger Empire"
Fast Food Nation - Eric Schlosser
Grinding It Out: The Making of McDonalds - Ray Kroc
Quotes, unless otherwise stated, are from Ray Kroc, via the sources above.
* Kroc was the founder of the McDonald's Corporation, but the first restaurant was the property of Mac and Dick McDonald.