Ray Kroc (1902–1984)

If McDonald’s, the world’s largest fast-food chain, with 31,000 outlets in 119 countries (as of 2010), were named after the man who was responsible for the company’s remarkable growth, 47 million customers every day would have the option of eating Big Rays instead of Big Macs. But only a handful of these customers would know who Ray Kroc was and what he did. While the name of the business he created became an international byword, a shorthand for the American lifestyle, Kroc himself shares very little of that fame.

Yet Kroc, more than any other person, deserves what some might call the credit and others the blame for the transformation of the ways in which Americans—and many others in the world—apportion their food budget, choose what to eat, and decide how and where they eat it. Americans now spend almost 50 percent of their food dollars on restaurants, much of it in McDonald’s and similar outlets.

Eric Schlosser, author of Fast Food Nation, documents the phenomenal growth of the fast-food industry and its role in the American economy:

In 1970, Americans spent about $6 billion on fast food; in 2000, they spent more than $110 billion. Americans now spend more money on fast food than on higher education, personal computers, computer software, or new cars. They spend more on fast food than on movies, books, magazines, newspapers, videos, and recorded music—combined.

The origins of this consumption revolution can be traced back to a hamburger stand in San Bernardino, California, operated by Dick and Mac McDonald. But the McDonald brothers, despite their iconic incarnation, were only bit players in fast-food history, on stage for the opening scene, and then vanished from the rest of the story. The two were content to serve burgers and fries to a steady market of customers. It was Kroc who saw the possibilities, though it is doubtful he could in the mid-1950s have envisioned the far-reaching results of his plans—domination of first the United States’ and later the world’s fast-food market and the radical change of both American and international eating habits.

The McDonalds had been in the food business since 1937, when the brothers’ father, Patrick, opened “The Airdrome” restaurant at the airport in Monrovia, California, selling hamburgers for 10 cents and all-you-can-drink orange juice for a nickel. In 1940, Dick and Mac moved the building itself 40 miles to San Bernardino and gave it the family name. In 1948, they shut down their carhop drive-in to introduce a new method of preparation for a basic menu of hamburgers, cheeseburgers, French fries, milk shakes, soft drinks, and apple pie. Instead of having orders delivered by carhops, the restaurant was self-service.




Ray Kroc opened his first McDonalds restaurant in Illinois in 1955. Today there are 33,000 McDonalds restaurants in 119 countries around the world.





Ray Kroc opened his first McDonald’s restaurant in Illinois in 1955. Today there are 33,000 McDonald’s restaurants in 119 countries around the world. (Art Shay/Time & Life Pictures/Getty Images)

They named their method the “Speedee Service System” and achieved efficiencies by designing the kitchen as an assembly line. In doing so, they had developed the operating principles of the fast-food industry.

Kroc first encountered the McDonald brothers’ business in 1954 when he was 52 years old and a distributor for “Multiuser” milk shake machines based in Chicago. When he learned that the brothers were using eight of his machines, he became curious about their high sales volume and visited San Bernardino. Impressed by the effectiveness of the system, he approached them with the potential for growth and expansion. The McDonalds lacked that ambition but gave Kroc the role of their franchising agent. Except for areas of California and Arizona already licensed by the bothers, the rest of the country was his. Or so he thought. On March 2, 1955, he established McDonald’s System, Inc. and took his first steps to going national.

Returning to the Chicago area, Kroc opened his first McDonald’s in Des Plaines, Illinois, on April 15, 1955, and on the same day incorporated the company as McDonald’s Corporation.

Planning to open others in the area, he learned that the brothers had not informed him they had already licensed franchise rights for Cook County, Illinois, to the Freijack Ice Cream Company. But he was able to buy back the rights for $25,000. By 1958, Kroc had 34 McDonald’s, opening 67 more in 1959. In just four years, he had grown the company from 1 to more than 100 restaurants.

Kroc rejected the usual practice of letting others run franchise operations for a relatively small fee. He decided to buy the land for McDonald’s and retain profits for the company.

But that impressive start became modest in comparison with the burgeoning expansion of the 1960s and 1970s. Kroc turned to full-scale advertising in 1960 with his “Look for the Golden Arches” campaign, creating the arches as a logo in 1962. One year later, McDonald’s had sold its billionth hamburger.

Before that, in 1961, Kroc had bought out the brothers for $2.7 million and, in 1965, went public with the corporation, offering common shares at $22.50. If someone had purchased 100 shares on that day and held onto them through 12 splits, by 2003 that person would have had 74,360 shares worth approximately $1.8 million.

The Big Mac was introduced in 1968, the year the number of McDonald’s grew to 1,000 and Fred Turner became the company’s president. Kroc took on the role of chairman and continued as CEO until 1973, the year after annual sales first passed the $1 billion mark. Four years later, that income had grown to $3 billion.

By the time Kroc died in January 1984 at the age of 81, the business he created had sold more than 50 billion hamburgers, fended off increasing competition from chains such as Burger King and Wendy’s, and met changing customer tastes with new meals. Chicken McNuggets were introduced in June 1980, and by December 1983 McDonald’s had become the world’s second largest retailer of chicken.

Born on October 5, 1902, Kroc was entrepreneurial from an early age, at 15 lying about his age to become a Red Cross ambulance driver, and later, after trying many fields, deciding to focus on his talents as a salesman, both of himself and of the products he represented. He convinced Earl Prince, who invented the milk shake machine, to grant him exclusive marketing rights, which he exercised for the next 15 years, until he met the McDonald brothers.

As a company leader, Kroc gave priority to the functioning of an established system, saying that “The organization cannot trust the individual; the individual must trust the organization.” He was fanatical about details and adherence to a fixed set of standards by every McDonald’s restaurant, personally conducting surprise inspections of franchises when he traveled.

From the beginning, Kroc wanted McDonald’s to be different from and better than the national restaurant chains already in existence, such as Big Boy, Dairy Queen, and A&W. He believed he was selling a service more than he was selling food and that consistency was the central source of success. Every McDonald’s had to be operated exactly in the same way, with the processes of food preparation broken down into steps that could be replicated exactly in each restaurant.

Kroc devoted his energies to the company despite serious health problems, including diabetes and arthritis and the removal of his gall bladder and thyroid gland.

Despite his dedication to the growth and success of McDonald’s, Kroc also believed in public service. When the San Diego Padres were threatened with a move to Washington, D.C., he bought the baseball team in 1974 to keep it in San Diego. That same year he opened the first Ronald McDonald House in Philadelphia, a facility named for the company’s red-haired clown created to appeal to children. The houses provided a home for families with seriously ill children in nearby hospitals. By the time of Kroc’s death, close to 100 Ronald McDonald Houses existed throughout the United States.

While Kroc initiated the opening of overseas franchises once the domestic market was saturated, the real growth took place with the 1990s. Still he set the pattern of adapting the menu to local tastes, including adhering to food prohibitions, and even altering the company name to make it pronounceable in certain languages, such as Makudonaldo in Japan.

Not only did Kroc make McDonald’s a national phenomenon, he initiated a culinary revolution. Before Kroc, hamburger outlets and drive-up windows existed throughout the country, but they were localized and small scale, spots for an occasional food diversion. Most families ate at home and chose a traditional menu of meat, potatoes, and vegetables prepared and cooked in individual kitchens. After McDonald’s, the diet changed to items that could be ready in just minutes and consumed quickly so that people could devote their time to other activities.

With the flourishing of McDonald’s, much of the nation’s food budget shifted to eating out and letting others make the meal, the percentage doubling between 1955 and 2010 and the number of franchised restaurants tripling their share of the market between 1970 and 1995 to one in four eating establishments. In 2010, McDonald’s still maintained its dominance as the world’s number one franchiser, a position it has held since such rankings began, with an international income of more than $73 billion.

Of course, Ray Kroc did not accomplish this transformation single-handedly. His acumen emerged at the right time when the pace of life was changing and people sought time-saving convenience. He gave them what they wanted, and want it they did, first Americans and eventually French, Italians, Chinese, and many millions of others with ancient traditions of very different cuisines and dining habits.

The prevalence of McDonald’s and the fast-food culture it spawned, a force through the United States and the world, has led to a growing backlash from cultural, environmental, and nutritional critics.

Even though the company has attempted to adapt its food offerings to local conditions, it has been accused of disrupting centuries-old culinary traditions. In France, for example, where food preparation has been considered an art and where ingesting multiple courses of food and wine can take several hours, many have railed against what is called “le fast food” as an abomination, undermining eating habits and taste buds, particularly of the young.

Environmentalists have accused McDonald’s and its industry of mistreating the animals they breed for food, of destroying hectares of forest and other habitats for cultivation of meat and potatoes, of contributing to climate degradation, and of adding massive amounts of waste to the environment. McDonald’s has agreed to change certain policies, such as substituting biodegradable plates and paper for materials that would not break down.

By far, the most prevalent criticism has been the effects of fast food and the health of those who consume it because of the abundance of high levels of calories, saturated fat, and by-products that are known causes of heart disease, diabetes, cancer, and other major disorders resulting from the food itself and from the alarming rise in obesity, first among Americans and later on the populations of other nations.

The 2004 film Super Size Me by Morgan Spurlock became a source of a major controversy. As an experiment, Spurlock devoted a month to eating three meals at McDonald’s each day, limiting himself to items on McDonald’s menu, choosing every item on the menu at least once during the period, and opting for the SuperSize meal whenever asked by a server. The result was a weight gain of close to 25 pounds, depression, lethargy, diminished sex drive, and heart palpitations. Doctors were surprised by how much his health had deteriorated. It took Spurlock more than a year to return to his starting weight. The experiment has been attacked as unrepresentative because his consumption of McDonald’s meals was the number most nutritionists say a person should eat over eight years.

McDonald’s did make modifications to its menu, stopping the SuperSize option and attempting to offer more healthy choices. Still, as obesity rates increase, especially among the young, McDonald’s continues to receive blame.

McDonald’s also continues to thrive. At this point, it probably is doubtful that the more than 50 years of the fast-food juggernaut can be reversed. Whether American and world eating habits will undergo an equally radical change in the next 50 years is an open question. If they did, would a single person, a Ray Kroc of the future, play an equally fundamental role?

—Walter Cummins

References

“Changing Landscape.” Franchise Times. http://www.franchisetimes.com/content/page.php?page=00131 .

“FAQs.” McDonald’s Canada. http://www.mcdonalds.ca/en/aboutus/faq.aspx .

Highbeam Business. “Eating Places.” http://business.highbeam.com/industry-reports/retail/eating-places

“Ray Kroc Biography.” Buzzle.com. http://www.buzzle.com/editorials/4–21–2005–68865.asp.

“Ray Kroc Biography.” Woopidoo Biographies. http://www.woopidoo.com/biography/ray-kroc/index.htm .

Schlosser, Eric. Fast Food Nation: The Dark Side of the All-American Meal. New York: Harper Perennial, 2005.

Scott, A. O. “The Ties that Bind America’s Food Chain” (review of Fast Food Nation). The New York Times, November 17, 2006. http://movies.nytimes.com/2006/11/17/movies/17fast.html .

Super Size Me, Dir. Morgan Spurlock. Perf. Morgan Spurlock. Samuel Goldwyn Films, 2004.