Raymond Albert “Ray” Kroc was an extremely proficient American businessman. Once referred to by Harvard Business School as “the service sector’s equivalent of Henry Ford”, Kroc but had a modest beginning. Starting from being a salesman of multi-mixer, he established himself as the man behind the worldwide name and fame of McDonald's with his mastermind. In 1954, after grabbing the franchise of small-scale McDonald’s Corporation, he transformed it into one of the most successful fast food operations in the world. He also utilized standardization to ensure that the McDonald’s food products to taste the same in all the outlets. Kroc revolutionized the American restaurant industry with the new and developed operating and delivery system. He was named in Time 100 as “The Most Important People of the Century”. Kroc in his lifetime gathered huge wealth of $500 million. Also, he owned the San Diego Padres baseball team which was started in the year 1974.
Ray Kroc Childhood & Early Life
Ray Kroc was born on October 5, 1902 in Oak Park, Chicago, Illinois to the parents of Czech origin. The father of Kroc was originally from the village Bøasy near Plzeò, Czech Republic. The childhood and most of the life of Kroc was spent in Oak Park, Illinois only. When Kroc was 15 years old, he was trained to become an ambulance driver during the First World War. At that time, he made friends with Walt Disney who was also getting training with him. But the war soon ended before Kroc could see the action. Between the years of the end of war and early 1950s, Kroc tried his luck at numerous trades such as paper-cup salesman, pianist, jazz musician and band member. He also attempted his fate at an Oak Park radio station. He also once worked for room and boarded at one of the restaurants of Ray Dambaugh in the Midwest in order to learn the strategies to do restaurant business, (After several years, he paid his gratitude and respect to Ray Dambaugh for his favor by attending his funeral in Evans City, Pennsylvania). Kroc with the passing years became a multi-mixer milkshake machine salesman and traveled all around the country.
The sales of Prince Castle Multi-Mixer, however, witnessed a dip as it faced tough competition from the lower-priced Hamilton Beach products. During this period, Kroc noticed McDonald brothers. The brothers had bought eight of his multi-mixers. He then soon visited the San Bernandino store and was convinced that he could easily sell the multi-mixers to their each new restaurant they were inaugurating. Therefore, he went to the McDonald brothers and offered the same. At this time, the McDonald brothers were looking for a new franchising agent as their agent Bill Tansey had left them, due to the health issues. With the course of time, Kroc got irritated with the willingness of brothers to accept their restaurants chain. Thus in 1961, Kroc purchased the company from the McDonald’s brothers. The agreement of the same was that the McDonalds would receive a huge amount of $2.7 million for the chain which was ample to pay $1 million to each brother after the deduction of tax and to continue receiving a major royalty of 1.9% on the gross sales. The percentage was initially given 2% by the brothers which came down to 1.9 after the negotiation. But Kroc demanded that he could not show the royalty to the investors, and thus the agreement was finalized with split agreement between the parties. Kroc became quite frustrated at the closing table when the brothers did not transfer any real estate and rights to the original unit to him as they had discussed earlier of giving the entire operations, property and everything to the founding employees. Kroc closed the transaction and denied to consider the royalty part of the agreement as it was not finalized in writing.
The McDonald brothers constantly told Kroc that he could modify and make changes to things such as the original blueprint(building codes were different in Illinois than in California), etc, but in spite of Kroc’s requests, the brothers never sent him any such formal letters which allowed the modifications in the chain legally. Kroc then opened a new McDonald's restaurant just near the McDonald's with the “The big M” in the name as the brothers had neglected to retain the name’s rights, to force it out of the business. After the agreement was finalized between Kroc and the McDonald Brothers, Kroc posted a letter to Walt Disney his old acquaintance. He wrote in the letter stating that he had taken over the national franchise of the McDonald's system and wanted to inquire if there were an opportunity for a McDonald's in his Disney Development. On the reception of the same, Disney agreed under the condition to elevate the price of fries from ten cents to fifteen cents in order to taste good profit. But Kroc denied the condition and refused to gauge his loyal consumers. He left Disney to open without a McDonald's restaurant. Undertaking Henry Ford’s assembly line ideas, Kroc introduced a whole new variety of fast foods with McDonalds. He also made use of standardization which was a business tactic to ensure that each “Big Mac”, a McDonald’s burger, tastes the same regardless whether a customer is having it in New York or Tokyo. Kroc also brought revolution in the methods of franchising, setting strict rules on the way the food is prepared. These rules were applicable to the customer service standards with such orders that money be refunded to clients in case of incorrect order or to consumers who had to wait for more than five minutes to get their ordered food. At the same time, Kroc also allowed the franchisees to decide their best strategies to market the product. The biggest example of the same is that Willard Scott developed the now internationally recognized figure known as Ronald McDonald to enhance the sales of hamburgers in the Washington, D.C.
Kroc married three times toEthel Fleming (1922–1961), Jane Dobbins Green (1963–1968) and Joan. He stayed with his third wife till the end of his life.
Ray Kroc died on January 14, 1984 of heart failure at Scripps Memorial Hospital in San Diego, California. He was 81.