Kroc in 1978
|Born||Raymond Albert Kroc
October 5, 1902
Oak Park, Illinois, U.S.
|Died||January 14, 1984
San Diego, California, U.S.
|Cause of death||Heart failure|
|Resting place||El Camino Memorial Park
San Diego, California, United States
|Spouse(s)||Ethel Fleming (m. 1922; div. 1961)
Jane Dobbins (m. 1963; div. 1968)
Joan Kroc (m. 1969)
Raymond Albert "Ray" Kroc (October 5, 1902 – January 14, 1984) was an American businessman. He joined McDonald's in 1954 and built it into the most successful fast food corporation in the world. Kroc was included in Time 100: The Most Important People of the Century, and amassed a fortune during his lifetime. He owned the San Diego Padres baseball team from 1974 until his death in 1984.
Kroc was born on October 5, 1902 in Oak Park, Illinois, near Chicago, to parents of Czech origin, Rose Mary (Hrach) and Alois "Louis" Kroc. His father was from the village of Břasy near Plzeň, Bohemia (now the Czech Republic). The elder Kroc had made a fortune speculating on land during the 1920s, only to lose everything with the stock market crash in 1929.
He grew up and spent most of his life in Oak Park. During World War I, he lied about his age and became a Red Cross ambulance driver at 15, though the war ended and he was not posted overseas. During the Depression, Kroc worked a variety of jobs selling paper cups, as a real estate agent in Florida, and sometimes playing piano in bands.
After World War II, Kroc found employment as a milk shake mixer salesman for the foodservice equipment manufacturer Prince Castle. When Prince Castle Multi-Mixer sales plummeted because of competition from lower-priced Hamilton Beach products, Kroc was impressed by Richard and Maurice McDonald who had purchased eight of his Multi-Mixers for their San Bernardino, California store, and visited them in 1955. Kroc became convinced that the concept and design of this small chain had the potential to expand across the nation.
Having been in approximately one thousand kitchens, Kroc believed the McDonald brothers had the best-run operation he'd ever seen. The restaurant was clean, modern, mechanized, and the staff professional and well-groomed. Roadside hamburger restaurants were more often than not hangouts for motorcycle gangs and rebellious teenagers, and Kroc saw in McDonalds a better vision for a restaurant. He once said "In my experience, hamburger joints are nothing but jukeboxes, pay phones, smoking rooms, and guys in leather jackets. I wouldn't take my wife to such a place and you wouldn't take your wife either." Kroc also believed the hamburger was more aesthetic than the hot dog and lent itself better to the mechanized fast food industry he envisioned.
Kroc opened the first franchised McDonald's, Inc. in Des Plaines, Illinois. Kroc remained active in Des Plaines until the end of his life, frequently phoning the manager of the store across the street to remind him to clean his restaurant properly. The Des Plaines location boomed, bringing in hundreds of dollars on its opening day. Kroc franchised out scores of restaurants to franchisees.
Kroc has been credited with making a number of innovative changes in the food-service franchise model. Chief among them was the sale of only single-store franchises instead of selling larger, territorial franchises which was common in the industry at the time. Kroc recognized that the sale of exclusive licenses for large markets was the quickest way for a franchisor to make money, but he also saw in the practice a loss in the franchisor's ability to exert control over the course and direction of a chain’s development. Above all else, Kroc wanted uniformity in service and quality among all of the McDonald’s locations. Without the ability to influence franchisees, Kroc knew that it would be difficult to achieve that goal. By granting a franchisee the right to only one store location at a time, Kroc retained for the franchise some measure of control over the franchisee, or at least those desiring to someday own the rights to another store.
Kroc's policies for McDonalds included establishing locations only in suburban areas, not in downtowns since the seedy underbelly of urban areas might eat in them after the main business hours were over. Restaurants were to be kept properly sanitized at all times, and the staff must be clean, properly groomed and polite to children. The food was to be of a strictly fixed, standardized content and restaurants were not allowed to deviate from specifications in any way. There was to be no waste of anything, Kroc insisted, every condiment container was to be scraped completely clean. Kroc also opposed hiring women as employees because he believed they were unreliable workers and liable to flirt with male customers as they did in carhop restaurants.
Kroc had difficulty enforcing his strict policies in the beginning as several California franchisees began offering things that weren't supposed to be on the menu, altering prices, the recipes, or various other offenses. For a time, Kroc held off on licensing more McDonalds in California, preferring to concentrate on the Midwest where he imagined that people were more conservative and less likely to challenge authority.
Kroc had a contemptuous opinion of MBAs and people who attended business school or obtained college degrees in management, believing they lacked competitive drive or market savvy. For a very long time, McDonalds had a policy of not hiring MBAs. He also forbade McDonalds executives to have secretaries and required them to answer their own phones. They were expected to follow dress and grooming rules similar to those of rank-and-file employees in the restaurants, which included no beards or facial hair, and they received regular company pamphlets extolling thriftiness and financial responsibility both at the company and in their personal lives.
During the 1960s, a wave of new fast food chains appeared which copied McDonalds' model, including Burger King, Arbys, KFC, and Hardee's. Kroc spoke of the competition with contempt, saying that they did not offer the same quality of food, service, affordable prices, or sanitation as McDonalds. For a very long time, he resisted joining any fast food trade organizations for fear of giving away his business secrets.
Kroc became frustrated with the McDonald brothers' desire to maintain a small number of restaurants. The brothers also consistently told Kroc that he could not make changes to things like the original blueprint (building codes were different in Illinois than in California), but despite Kroc's pleas, the brothers never sent any formal letters which legally allowed the changes in the chain. In 1961, he bought the company for $2.7 million—enough to pay each brother $1 million after taxes, plus an annual royalty of 1.9%. Kroc had difficulty obtaining money for the buyout at first, as he was in debt from expansion and the banking industry and investors were unwilling to loan money to a fast food chain.
The agreement was a handshake with split agreement between the parties, because Kroc insisted that he could not show the royalty to the investors he had lined up to capitalize his purchase. At the closing table, Kroc became annoyed that the brothers would not transfer to him the real estate and rights to the original unit. The brothers had told Kroc that they were giving the operation, property and all, to the founding employees. Kroc reneged on the transaction, refusing to acknowledge the royalty portion of the agreement, because it was not in writing. Kroc also opened a new McDonald's restaurant near the original McDonald's—renamed "The Big M", as they had neglected to retain rights to the name—to force it out of business.
After finalizing the agreement with the McDonald brothers, Kroc sent a letter to Walt Disney. They had met as ambulance attendant trainees at Sound Beach, Connecticut during World War I. Kroc wrote, "I have very recently taken over the national franchise of the McDonald's system. I would like to inquire if there may be an opportunity for a McDonald's in your Disney Development". According to one account, Disney agreed under stipulation to increase fries from ten cents to fifteen cents, allowing himself the profit. Kroc refused to gouge his loyal customers, leaving Disneyland to open without a McDonald's restaurant. Journalist Eric Schlosser, writing in his book Fast Food Nation, believes that this is a doctored retelling of the transaction by some McDonald's marketing executives. Most probably, the proposal was returned without approval.
Kroc maintained the assembly line "Speedee Service System" for hamburger preparation, which was introduced by the McDonald brothers in 1948. He standardized operations, ensuring every burger would taste the same in every restaurant. He set strict rules for franchisees on how the food was to be made, portion sizes, cooking methods and times, and packaging. Kroc also rejected cost-cutting measures like using soybean filler in the hamburger patties. These strict rules also were applied to customer service standards with such mandates that money be refunded to clients whose orders were not correct or to customers who had to wait more than five minutes for their food. However, Kroc let the franchisees decide their best approach to marketing the products. For example, Willard Scott created the figure now known internationally as Ronald McDonald to improve sales in the Washington metropolitan area.
By the time of Kroc's death, the chain had 7,500 outlets in the United States and 31 other countries and territories. The total system-wide sales of its restaurants were more than $8 billion in 1983, and his personal fortune amounted to some $600 million.
Kroc retired from running McDonalds in 1974. While he was looking for new jobs, he decided to get back into baseball, his lifelong favorite sport, when he learned that the San Diego Padres were for sale. The team had been conditionally sold by founding owner C. Arnholt Smith to Washington, D.C. grocery-chain owner Joseph Danzansky, who planned to move the Padres to Washington. However, the sale was tied up in lawsuits when Kroc purchased the team for $12 million, keeping the team in San Diego. In Kroc's first year of ownership in 1974, the Padres lost 102 games, yet drew over one million in attendance, the standard of box office success in the major leagues during that era. Their previous top attendance was 644,772 in 1972. The San Diego Union said Kroc was "above all, a fan of his team". On April 9, 1974, while the Padres were on the brink of losing a 9-5 decision to the Houston Astros in the season opener at San Diego Stadium, Kroc took the public address microphone in front of 39,083 fans. "I’ve never seen such stupid ballplaying in my life," he said. The crowd cheered in approval. In 1979, Kroc's public interest in future free agent players Graig Nettles and Joe Morgan drew a $100,000 fine from Commissioner Bowie Kuhn. Frustrated with the team, he handed over operations of the team to his son-in-law, Ballard Smith. "There's more future in hamburgers than baseball," Kroc said.
Kroc's foundation supported research and treatment of alcoholism, diabetes, and other diseases. He established the Ronald McDonald House foundation. He was a major donor to the Dartmouth Medical School.
A lifelong Republican, Kroc believed firmly in self-reliance and staunchly opposed government welfare and the New Deal. He generated significant controversy for donating $255,000 to Richard Nixon's reelection campaign in 1972; many observers, notably Senator Harrison Williams, accused Kroc of making the donation to influence Nixon to veto a minimum wage bill making its way through Congress.
In 1980, Kroc suffered a stroke and entered a rehabilitation facility for his alcoholism. He died of heart failure at a hospital in San Diego, California, on January 14, 1984, at the age of 81, and was buried at the El Camino Memorial Park in Sorrento Valley, San Diego.
Kroc's third wife, Joan, was a philanthropist. Among many other things, she enabled the founding of The Salvation Army Ray & Joan Kroc Corps Community Centers. His earlier marriages, to Ethel Fleming (1922–1961) and Jane Dobbins Green (1963–1968), ended in divorce.
In popular culture
Kroc co-authored the book Grinding it Out released in 1977. It received positive reviews including from critic Ryan Stewman: "Salesman to salesperson, get the book and read it. You should be inspired by it. Ray was one of us who made it!"
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- Mattern, Joanne (2011). Ray Kroc: McDonald's Restaurants Builder. ABDO. ISBN 978-1-61613-559-1. Retrieved June 12, 2011.
- Reiter, Ester. Making Fast Food: From the Frying Pan into the Fryer. Buffalo: McGill-Queen's University Press, 1991.
- Janice Claire Simpson, Ray Kroc: Big Mac Man (1978)
- Biography: Ray Kroc, Fast Food McMillionaire (1998) video
- Kroc, Ray (2016). Grinding It Out: The Making of McDonald's. ISBN 978-1-250-12750-1.