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Taking the Fast Food Industry by Storm: McDonald’s Expands

Article Overview: “I was 52 years old,” recalled Kroc. “I had diabetes and incipient arthritis. I had lost my gall bladder and most of my thyroid gland in earlier campaigns, but I was convinced that the best was ahead of me.”

Taking the Fast Food Industry by Storm: McDonald’s Expands

“I was 52 years old,” recalled Kroc. “I had diabetes and incipient arthritis. I had lost my gall bladder and most of my thyroid gland in earlier campaigns, but I was convinced that the best was ahead of me.”

The day after he first met the McDonald brothers, Kroc pitched them his idea; he thought their successful little chain of eight restaurants could be a successful nationwide chain. When the brothers asked who would manage the expansion, Kroc was ready with his reply: “Well, what about me?” The McDonald brothers had effectively created the principles of the modern fast food industry with their Speedee Service System, but it wasn’t until Kroc came along that they began to realize their enormous potential.

In March 1955, Kroc created McDonald’s Systems Inc., renaming it to McDonald’s Corporation five years later. He acquired franchise rights and opened up his first McDonald’s franchise in Des Plaines, Illinois in April 1955. The next year, Kroc established the Franchise Realty Corporation, purchasing tracts of land to lease to eager franchisees. He also initiated a national advertising campaign. By 1960, there were over 200 McDonald’s across the U.S.

Six years later, Kroc would buy out the McDonald brothers for $2.7 million, but more importantly, he would gain complete control over the business. “The McDonald brothers were simply not on my wavelength at all,” said Kroc. “I was obsessed with the idea of making McDonald's the biggest and the best. They were content with what they had; they didn't want to be bothered with more risks and more demands.”

While he kept the fundamentals of the business in place, he made improvements elsewhere. Most importantly, Kroc cleaned it up – both literally and figuratively speaking. “If you have time to lean, you have time to clean,” he would say, insisting that everything from the kitchen floor to the parking lot was as clean as possible. Kroc also began to standardize the entire process, so that it could be effectively replicated in any city in any state across the country. Guaranteeing a hamburger fat content below 19%, and a patty which weighed 1.6 ounces and was 3.875 inches in diameter helped ensure predictability in all McDonald’s outlets, which became one of the key factors in the chain’s immense popularity.

By 1963, McDonald’s had opened its 500th restaurant, served its 1 billionth hamburger and launched its famous clown, Ronald McDonald. Kroc’s national presence was growing at a rapid pace. Within six years of airing the first McDonald’s nationally televised commercial in 1965, the Ronald McDonald clown was familiar to 96% of American children, more than the amount who even knew the name of the U.S. President.

In 1965, McDonald’s went public; 300,000 shares were initially sold at $22.50 each, later jumping to $49. Kroc had made $3 million on the sale. The company continued to expand rapidly; by 1972, there was one store for every 90,000 American citizens. But, Kroc wanted more and embarked on an ambitious campaign for foreign markets. First, the U.K., then Europe, Kroc began to erect Golden Arches in almost every continent.

In 1974, Kroc stepped down as CEO of the company he single-handedly grew into a global empire, but remained on as Chairman, and later, Senior Chairman of McDonald’s Corporation. He died of heart failure in 1984 at the age of 81, just ten months shy of McDonald’s selling its 50 billionth hamburger. That is the legacy that he leaves behind him.

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Article Tags: complete control, des plaines, fast food, food industry, franchise rights, franchisees, gall bladder, kitchen floor, mcdonald brothers, mcdonalds, mcdonalds franchise, national advertising, national advertising campaign, parking lot, plaines illinois, realty corporation, thyroid, thyroid gland, tracts, wavelength



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