Ray Kroc: founder's philosophies remain at heart of McDonald's success

Nation's Restaurant News, April 11, 2005

At the venerable age of 52, a time when most folks are thinking ahead to retirement, Ray A. Kroc was on the verge of creating an empire.

Having worked in sales for many years as an exclusive distributor for Multimixer milkshake machines, Kroc one day became impressed by a client--a small chain of quick-service hamburger restaurants based in San Bernardino, Calif. He soon acquired the franchising rights to the chain from the owners, brothers Richard "Dick" and Maurice "Mac" McDonald.

Kroc opened his first McDonald's hamburger restaurant--featuring his own Multimixer machines--in Des Plaines, Ill., in April 1955 and founded the company that eventually evolved into McDonald's Corp.

In 1961 Kroc bought out the McDonald brothers for $2.7 million on borrowed funds. With interest the cost eventually came to $14 million. Some 50 years later--as the world's largest fast-food restaurant company, with some 31,000 units worldwide and a company record of $19.01 billion in annual sales for 2004--it seems like Kroc scored the deal of the century.

Folks at McDonald's today credit Kroc's vision and leadership for the firm foundation on which the company eventually would grow.

"One of the biggest things I love about McDonald's, starting with Ray Kroc, was his whole philosophy around the 'three-legged stool.' That's our operators, our suppliers and our employees--that whole piece," notes chief diversity officer Pat Harris. "Ray Kroc always said, 'None of us is as good as all of us,' and by bringing the three-legged stool together, we continue to live through that philosophy that Ray Kroc set for us many years ago."

Those words are particularly relevant today with regards to diversity issues.

"Ray said it then, and it stands true today, if we talk about diversity and inclusion, that none of us is as good as all of us, it helps us to grow," Harris explains. "Management learned that early on."

Kroc served as chairman of McDonald's from its founding in 1955 until 1977, when he was named senior chairman. Under Kroc's leadership, McDonald's Corp. set standards for the fast-food industry, creating an enterprise comprised of thousands of small businesses run by independent franchisees who own and operate some 85 percent of all the company's restaurants.

"Rather than have an individual who may live in one state and own restaurants in another state, Ray's perspective always was--and remains to this day [for the company]--we don't have passive ownership," notes Don Thompson, executive vice president and chief operations officer, McDonald's USA. "Our franchisees are all expected to work their business. We don't expect them to work over the fryer every day, but we do expect them to pitch in."

And that philosophy helps create community awareness, something McDonald's grew on and still thrives on today.

"When [owner/operators] go to the grocery store or the dry cleaners or to church, the people that they see know them as 'Mr. and Mrs. McDonald's.' We can't tell you how critical that is," Thompson adds. "When they see McDonald's, it's not this big brand that's No. 1. We want them to see 'Harold and Jean' or 'Dave and Haley.' It's kind of hard to remember a person's name when you don't live in that state."

But what would Kroc think of his McDonald's today, at some 31,000 restaurants strong?

"I think there'd be certain things, many things, he's really smiling at," Thompson says.

"For a long period of time, we had been an execution company--consistency really ruled the day. We had a process to address the needs of the customer. That was the way to go," Thompson explains. "Over the last 19 to 24 months, our focus on the customer has been so intense. I think that is something that Ray would be proud of. I think a couple of years ago, he would have slapped us upside the head and said, 'Never forget that the customer is the business.' "

"I think he'd be happy--but he'd always have a watch word, as long as there was one restaurant that doesn't meet expectations," Thompson says.

Kroc likely would be "astounded" were he here today to see McDonald's thriving on its 50th anniversary, notes Reggie Webb, a longtime operator and chair of McDonald's National Leadership Council, the chain's sanctioned franchisee group.

"I think he'd be really pleased to see how McDonald's was evolving," Webb says. "I think that Ray was, first of all, a very highly principled person. Every year he would send out these little slogans for the year. 'McDonald's Will Work If You Will' is one of them that I will never forget."

"His favorite thing was this whole thing about 'press on.' Basically, the human spirit is indomitable, and as long as you continue to work on it, you can't lose," explains Webb, who as head of Webb Family Enterprises Inc. of Upland, Calif., runs 12 McDonald's restaurants in southern California.

"It's not about the education you have, but the determination you have to succeed," Webb adds. "He wasn't a very educated man, but he was a determined man. He didn't create McDonald's, but he recognized what it could be and developed it."