Justin Skinner

Mr. McKeever
English 102H
Word Count: 1434
May 9, 2016
Ray Kroc and the Rise of the Fast Food Nation
This is the story of how Ray Kroc, a 52-year-old milkshake mixer machine
salesman from Oak Park, Illinois, single-handedly changed the world forever by
becoming the brains behind one of the largest companies in the world, McDonalds. It
took a great deal of hard work and a bit of time, but he managed to overcome all of the
many obstacles in his way. Kroc was able to change not only the way Americans eat,
but how the entire world eats. He pioneered a new nation that is still thriving today long
after his death, the Fast Food Nation.
It all started in 1937. Kroc was traveling the country selling paper cups for Lily
Tulip Cup Co. when he met Earl Prince of Prince Castle Ice Cream. Prince was a
longtime customer of Lily Tulip, buying truckloads of cups for his ice cream. Ice cream
was his passion; he was always thinking of new things to make the experience better.
He invented a new piece of equipment called the Multi-Mixer. It had five rotating
spindles that could crank out five milkshakes at once. Intrigued and marveled by the
machine, Kroc knew he had found his next business adventure. He wanted to be the
exclusive sales representative of the Multi-Mixer. He found the courage to talk to Prince
and convinced him to accept his request. For the next two decades, he traveled the
country selling the mixer.

For a while things were amazing; Kroc could not sell the mixers fast enough!
Clients who had previously bought Lily Tulip cups from him remained loyal to him and
even brought in new clients. When it came to replacements, Kroc was the only one for
them to turn to. That is until Hamilton Beach began making the same mixer machines
for a cheaper price. Due to the new competition and pricing, Kroc began to lose some of
his loyal clients. Year-after-year, Kroc was barely making enough to make ends meet.
He did notice that two longtime customers, Dick and Maurice MacDonald, were
purchasing a majority of the mixers he was selling. A couple of times a year, the
brothers would buy eight of the mixers. Kroc was amazed and confused. He was happy
they were buying mixers on a regular basis, but he was puzzled as to why they were
buying so many so frequently. Most customers would only buy one mixer and replace it
every couple of years, so how was it that these brothers were going through eight
mixers so quickly? Unknowingly, Kroc had stumbled upon his next business endeavor.
1954 was the year Krocs life would change forever. He wanted to know why the
MacDonald brothers needed to be able to make 40 milkshakes at one time. What were
they doing right that all his other customers were not? As part of his business, Kroc
would often travel to visit his patrons and see how they liked their mixers. Therefore,
being so enticed by the MacDonald brothers, Kroc traveled to San Bernardino,
California. What he discovered would change his life forever.
Kroc drove to San Bernardino, California and arrived three hours before the
MacDonalds brothers establishment opened. He wanted to sit back and check out
exactly what was going on. He was astonished that there was already a line down the
block hours before they even opened! Something was definitely happening here, I told

myself. This had to be the most amazing merchandising operation Id ever seen.
(Kroc). This is what Kroc told himself as he stood in the shadow cast by two radiant
golden arches. The octagonal restaurant had all-glass walls so that the customers could
see their food being prepared. Kroc, being sexist in the workplace, was blown away as
he watched the all-male crew looking dandy in their white uniforms and paper hats.
Considering the many burgers, fries and shakes they were dishing out, Kroc was
enthusiastic that the restaurant was squeaky-clean!
This restaurant was different from many of the food-service operations Kroc had
visited. McDonalds was running as smooth as a fine-tuned engine. They offered nine
items on their menu and prepared each one extremely well. Since the restaurant was a
car hop, the brothers had eliminated seating. They also eliminated the use of glassware
and china by using paper and plastic utensils. Since the hamburgers were made
assembly line style in mass quantities, they were able to push out orders in under 60
seconds! On top of the extremely fast service, prices were also extremely low with
burgers costing only 15. To put things in perspective, 15 in 1954 is equivalent to
$1.33 today (CPI Inflation Calculator). Kroc just knew this was the place he was looking
for and he could not get McDonalds off his mind. That night in my motel room I did a
lot of heavy thinking about what Id seen during the day. Visions of McDonalds
restaurants dotting crossroads all over the country paraded through my brain. (Kroc).
The next day, Kroc knew he had to talk to the MacDonald brothers. He
was positive their operation could succeed tremendously if they expanded. When he
first asked the brothers how they felt about expanding, they were reluctant. They had
sold franchises in Phoenix and Sacramento without success. They sold them cheap and

barely made any money from them. They told Kroc that they were happy with the
$100,000 they were earning annually from their restaurant. They were not in it for the
money, they just wanted to make people happy by doing something they were good at.
However, Kroc being the amazing salesman that he was, used every ounce of his
persuasion to cut a deal with the brothers. Not only would he sell the franchises for
more money than the previous franchises were sold for, but unlike the franchises that
had failed for the brothers in the past, the new franchises Kroc sold would give the
brothers 0.5% of the profits and Kroc 1.4% of the profits (Gross). Kroc believed
franchise purchasers would agree to these terms as this totaled to a very small amount
of only 1.9% of all profits coming back to the parent company (the brothers and Kroc).
This was also favorable to the brothers since they would have no overhead and
marketing costs for the franchises, unlike Kroc who would as he tried to expand the
company and also would be the one putting in all the hard work. Due in large part to this
arrangement, Kroc made very little money off the franchises.
Ray put his life on the line for this venture. He was only making $12,000 a year
selling mixers for a company that was headed for extinction due to massive competition
from Hamilton Beach mixers. He remortgaged his home to get McDonalds up and
running and he invested everything he had into the company. This was a big gamble as
he was too old to start over again if it failed; he was already over the hill! Luckily for him,
the company did take off with the help of a few others. At the beginning things were
rocky. By 1960 the company was making $75 million in sales, but only earning a mere
$159,000 after all expenses were taken out (Gross). Kroc was not making as much

money as he needed to pay all of his employees. One of his financial advisors, Harry
Sonneborn, came up with an idea that would turn everything around for them.
The idea was to open a real estate company, that they later titled, Franchise
Realty Corporation. They would buy the land the franchises were located on and then
sublease them to the franchisees at a higher price. The idea worked magic! Not only did
they make more money, but it also helped with the consistency of their products due to
mandatory conformation to corporate policies they initiated. Soon, Kroc had made
enough money to give raises to all of his employees and to buy the MacDonald brothers
out of the company. Kroc and the brothers were not agreeing on how to run the
company and other matters, so he paid them $2.7 million to buy out their ownership.
Finally, it was just Kroc running the show.
Kroc continued to expand and innovate McDonalds until his death in January
1984. He did not create McDonalds, but he turned it into what it is today - a true
American legacy. Kroc may not be alive today, but his legacy still lives on in every
McDonalds around the world. Without him, who knows what would have happened to
the simple quick service restaurant in San Bernardino.

Works Cited
CPI Inflation Calculator. n.d. 4 May 2016. <http://data.bls.gov/cgi-bin/cpicalc.pl>.
Gross, Daniel. Forbes Greatest Business Stories of All Time. John Wiley & Sons, Inc.,
1996. 6 April 2016.
Hamilton, Neil A. American Business Leaders: From Colonial Times to the Present.
ABC-CLIO, Inc., 1999. 22 February 2016.
Kroc, Ray A. Grinding It Out: The Making Of McDonald's. Chicago: Contemporary
Books, Inc., 1977. 6 April 2016.
Pepin, Jacques. "Ray Kroc." TIME Magazine 152.23 (1998): 176. 22 February 2016.