MCDONALD’S RAY KROC: He Cooked Up A Winner

ray  kroc

ray krocRay Kroc believed that never was a good time to stop growing. Kroc [1902-84] was already 52 years old when he got the franchising rights to a small hamburger stand started by Dick and Mac McDonald in San Bernardino, Calif. He’d been running a successful business, selling milkshake mixers.

“Yet I was alert to other opportunities,” Kroc wrote (with Robert Anderson) in Grinding It Out: The Making of McDonald’s. 

“I have a saying that goes, ‘As long as you’re green you’re growing. As soon as you’re ripe you start to rot.’”

Kroc pursued growth with a vengeance. He turned that franchise agreement into the largest fast food chain in the world.

Growing up, Kroc wasn’t an avid student. Instead, he spent his time daydreaming about his future and his future success. “I’d imagine all kinds of situations and how I would handle them,” Kroc wrote. But they weren’t idle fantasies he conjured.

“I never considered my dreams wasted energy; they were invariably linked to some form of action,” Kroc wrote. “When I dreamed about having a lemonade stand, for example, it wasn’t long before I set up a lemonade stand.”

Smiles Are Good Business 

Ray Kroc McDonalds IllinoisThe lemonade stand was the first in a long series of jobs. Kroc took a lesson from almost every one. From example, working behind the lunch counter at his uncle’s drugstore soda fountain, he discovered the importance of a positive attitude in sales. “That’s where I learned you could influence people with a smile and enthusiasm and sell them a sundae when what they’d come for was a cup of coffee,” he said.

It was at a job selling ribbon novelties that Kroc discovered the art of tailoring his spiel to the needs of his customers. “I’d have a sample room set up in whatever hotel I was staying in, and I’d learn what each buyer’s taste was and sell to it,” he said. “No self-respecting pitcher throws the same way to every batter, and no self- respecting salesman makes the same pitch to every client.”

While selling paper goods for the Lilly Cup Co., he saw that customers appreciated a straightforward, brief approach. “They would buy if I made my pitch and asked for their order without a lot of beating around the bush,” he said. “The key to closing a sale is to know when to stop selling.

“Too many salesmen, I found, would make a good presentation and convince the client, but they couldn’t recognize that critical moment when they should have stopped talking.”

In 1938 he signed a deal to be the exclusive sale agent for the MultiMixer, a milkshake mixer that could handle five shakes at once. It meant giving up a steady income, but Kroc believed he could make it work. He told a group of graduate students at DartmouthCollege you can achieve anything if you set your mind to it.

“You’re not going to get if free, and you have to take risks. I don’t mean daredevil risks. But you have to take risks, and in some case you must go for broke,” he said. “If you believe in something, you’ve got to be in it to the end of your toes. Taking reasonable risk is part of the challenge. 

Adversity Built Strength 

ray-Kroc-macdonaldsIt wasn’t easy. He had to take an unwanted partner to get the business started, and buying out the partner later put a severe strain on the company’s resources. Rather than get irritated about it, Kroc chose to look on the upside. “Perhaps without that adversity I might not have been able to persevere later on when my financial burdens were redoubled,” he said. “I learned then how to keep problems from crushing me.”

Kroc opened his first McDonald’s in Des Plaines, Ill., in 1955. After he ironed out early problems, the concept caught on. As he increased the number of franchises, Kroc had to add staff. He had specific qualifications in mind when he looked for them.

He never looked for yes men. He wanted people willing to disagree. “I believe that if two executives thing the same, one of them is superfluous,” he said.

Once hired, a Kroc employee was delegated authority to do his or her job. One early executive, Harry Sonneborn, came up with an unusual leas-to-purchace deal to acquire future store sites. Kroc thought the idea was crazy.

“But I let Harry plunge ahead without interference,” Kroc said. “I believe if you hire a man to do a job, you ought to get out of the way and let him do it. If you doubt his ability, you shouldn’t have hired him in the first place.”

Similarly, when Sonneborn hired an expensive consultant, others in the office were certain Kroc would be angry. “But that was the farthest thing from my mind,” he wrote. “I know that you have to spend money to make money, and as far as I was concerned, Harry was simply doing the job I’d hired him to do.”

In 1967, all the economists were predicting a recession; most businesses planned cutbacks in construction. Not Kroc. He ordered expansion to proceed.

ray-kroc-source“Hell’s bells, when times are bad is when you want to build,” Kroc said. “Why wait for things to pick up so everything will cost you more? If a location is good enough to buy, we want to build on it right away and be in there before the competition.”

As the company became more successful, it required larger stores with seating. Some on the executive team urged caution. Kroc, however, was thinking big. “I believe that if you think small, you’ll stay small,” Kroc said.

Over the course of his career, Kroc had to spend major cash to steer his company where he wanted it to go. He bought out the McDonald brothers’ share of the business.

“I don’t stew about what the other guy is making in a deal like this,” he said. “I’m concerned about whether it’s going to be a good thing for McDonald’s.”

Source: “BUSINESS LEADERS & SUCCESS – 55 TOP BUSINESS LEADERS & HOW THEY ACHIEVED GREATNESS” (With an introduction from William J. O’Neil, founder of INVESTOR’S BUSINESS DAILY, New York: McGraw-Hill, 2004, pages 53-55 

Jakarta, 22 March 2014 

Frans Indrapradja

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