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Ray Kroc

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Ray Kroc (October 5, 1903 – January 14, 1984)[1] was an American businessman who took over the (at the time) small-scale McDonald's Corporation franchise in 1954 and built it into the most successful fast food operation in the world. Kroc was included in Time 100: The Most Important People of the Century,[2] and amassed a $500 million fortune during his lifetime.[3] He was also the owner of the San Diego Padres baseball team starting in 1974.

Biography

Kroc was born to parents of Czech origin in Chicago, Illinois, in 1902. He grew up in Oak Park, Ill. During the First World War he trained to become an ambulance driver though the war ended before he ever saw action. Between the end of the war and the early 1950s he tried his hand at a number of trades including paper-cup salesman, pianist, jazz musician, band member and worked at a Chicago radio station.[4] He eventually became a multi-mixer milkshake machine salesman, traveling across the country. This work introduced him to brothers Dick and Mac McDonald who had opened the first McDonald's restaurant in 1940, in San Bernardino, California. Their innovative hamburger restaurant ran eight multi-mixers at a time. The McDonald brothers began franchising in 1953.

Convinced that he could sell numerous mixers to every new restaurant that opened, he partnered with the brothers to open and franchise additional McDonald's restaurants. Kroc eventually became frustrated with the brothers' willingness to accept their chain having only a handful of restaurants. In 1961, he purchased the company from the brothers. The agreement was for the McDonald brothers to receive $2.7 million for the chain and to continue to receive an overriding royalty of 1.9% (when negotiating the contract the McDonald brothers said that 2% sounded greedy, 1.9% was much more attractive) on the gross sales.[5]

The agreement was a handshake with spit agreement between the parties because Kroc insisted he could not show the royalty to the investors he had lined up to capitalize his purchase. At the closing table Ray became very mad 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 closed the transaction, then refused to acknowledge the royalty portion of the agreement because it wasn't in writing. The McDonald brothers consistently told Ray that he could make changes to things like the original blueprint (building codes were different in Illinois than California), but despite Ray's pleas, the brothers never sent any formal letters which legally allowed the changes in the chain. He also opened a new McDonald's restaurant near the Mcdonalds (now renamed "The Big M" as they had neglected to retain rights to the name) to force it out of business.[6]

Ray Kroc created a new kind of fast food with McDonald's, implementing Henry Ford's assembly line idea into his restaurants. He also utilized standardization, a business tactic that he used to make sure that every Big Mac would taste the same whether a person is in New York or Tokyo. Kroc also knew, for the most part, what the people wanted, which was standardized hamburgers. However one of his most famous flops was the Hulaburger, which consisted of a slice of grilled pineapple, with some cheese, on a bun. This was to appeal to Catholics who gave up beef during Lent. Kroc also revolutionized the art of franchising, where he set strict rules on how the food was made, but as for the marketing of the product, however, he let the franchisees decide on what the best approach was. For example, an actor named Willard Scott created the internationally recognized figure known as Ronald McDonald to improve sales of hamburgers in the Washington, D.C. area.

Kroc established various foundations for alcoholics, and also started the Ronald McDonald House foundation.

Kroc died of a heart ailment at Scripps Memorial Hospital in San Diego, California, on January 14, 1984 at the age of 81. Kroc was married to his third wife, Joan B. Kroc. Before he died he had been married twice before, to Ethel Fleming (1922–1961) and Jane Dobbins Green (1963–1968), who had been John Wayne's secretary.

The former Dire Straits guitarist and lead vocalist Mark Knopfler released a song about Ray Kroc on his 2004 album Shangri-La.[7] It was inspired by Ray Kroc's autobiography Grinding It Out and the starting of McDonald's, using many of Mr. Kroc's exact words: "Kroc style, boom like that."

References

  1. ^ "nndb.com". Retrieved 2008-10-12.
  2. ^ TIME 100: Ray Kroc
  3. ^ http://www.wiley.com/legacy/products/subject/business/forbes/kroc.pdf
  4. ^ cf. "Grinding It Out" 1977 by R. Kroc
  5. ^ cf. "Grinding It Out" 1977 by R. Kroc
  6. ^ cf. "Grinding It Out" 1977 by R. Kroc, page 123
  7. ^ http://www.sing365.com/music/lyric.nsf/Boom-Like-That-lyrics-Mark-Knopfler/5FABE725D09ED56948256EFB0014B775


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