PROJECT: BOOK REVIEW

McDonald’s
BEHIND THE ARCHES
JOHN F .LOVE
ABOUT THE BOOK

• HOW MC DONALD WORKS

• TERMS OF ITS CORPORATE MANAGEMENT
• FOOD PRODUCTION
• RAY KROC AS A CRUCIAL FIGURE A BRILLIANT
MANAGER AND SALESMAN
• CONTRIBUTION OF PEOPLE TOWARDS
GROWTH OF MACDONALDS
• FRANCHISER-FRANCHISEE REALTIONS
• SUCCESS OF MACDONALDS
FOUNDERS
RICHARD AND MAURICE MCDONALD’S

KEY PEOPLE
• RAY KROC -INDIVIDUAL PROMOTED
THE MULTIMIXER AND THROUGH ITS
PROMOTION MET THE MCDONALDS
BROTHERS
• FRED TRUNER- SECOND CHAIRMAN
AND CEO OF MCDONALDS
CORPORATION
• JIM SCHINDLER- HEAD OF
MCDONALDS ENGINEERING AND
DESIGN CORPORATION (KEY PERSON
IN REAL ESTATE BUSINESS)
 RAY KROC PHILOSOPHY :
Ray Kroc wanted to build a restaurant system
that would be famous for providing food of
consistently high quality and uniform methods of
preparation. He wanted to serve burgers, fries
and beverages that tasted just the same in
Alaska as they did in Alabama.

To achieve this, he chose a unique path: persuading both

franchisees and suppliers to buy into his vision, working not for
McDonald’s but for themselves, together with McDonald’s. He
promoted the slogan, “In business for yourself, but not by yourself
 THE UNKNOWN McDONALD’s…

• The MacDonald opened it 8000th store and served it 5th billion burger in 1984
• Macdonald spend 1 billion dollars on advertising every year
• It is Americas fourth largest retailer in the world
• Macdonald advertises through thirty televisions or radio aired everyday.
• Macdonald has wrought revolutionary changes in the meat and potato processing.
• It is the fourth largest purchaser of the beef.
• The chain sells so many French fries that it takes 5 percent of USA potato crop
harvested food and 2 percent of chicken.
• When MacDonald went public and the people who bought stock at $2250 for 100
shares would have been amounted to $1 million on 30 June 1994.
 13 REASONS WHY?
SUCCESS MANTRA
• Dedicated suppliers
• Capital management
• Property
• Management
• Low price
• Quick delivery
• Consumer friendly
• Advertising
• Goodwill
• Consistency
• Innovative
• Equipment's
• Job recruitment
• Richard and Maurice McDonalds had started the first
McDonalds outlet in San Bernardino. Ray Kroc visited the
outlet in 1954 and was given a tour by Richard and Maurice.
• Kroc sells many things and is eager to find something to sell
that will make him rich. He had never made a hamburger or
run a restaurant when he gets into McDonalds but he learns
the business as good as anyone else.
• Ray Kroc loved the speed mechanism and quality of work
done by the two brothers and then convinced them to open
few more outlets.
• Ray Kroc signed the contract and then began the search for
investors and also mortgaged his house to setup the business.
• He started convincing the investors and the business boomed up.Ray Kroc
came up with many ideas to expand the business but Richard and Maurice
MacDonald's was not convinced with ray Kroc and denied each and every
ideas of his as they thought that the quality and standards of the food would
differ.

• McDonald's had trouble making a profit, despite its operating system. Kroc
has never attended much to profit and loss statements and fails to make
McDonald's profitable in the process.

• Ray Kroc realised that he was not making

enough profits as he got 1.9 percent cut
in the net profit and had to give 0.5 percent
to the brothers and it was not enough for him.
• To reduce the cost Ray Kroc, introduced powdered milkshake (Instamix) . Instamix
came in two flavors i.e. chocolate and vanilla. And he later introduced strawberry. In
McDonalds this was the starting point that led to the change in the concept of
milkshakes.
• McDonald's finds out how to make money with real estate and a strategy developed
by Harry Sonneborn, who creates their real estate investment strategy.
• The strategy involves McDonald's creating a separate real estate agency to buy the
land for franchisees to build their McDonald's on; they often cannot afford to do this
on their own. They then charge mark-ups on the land. McDonald's leases from the
land owner and subleases to the franchisees, creating a "sandwich" strategy. It
produces immediate cash flow and gives McDonald's new control over the franchisee.
There are some legal difficulties, but it ultimately harmonizes interests between
McDonald's and franchisees
• Ray Kroc started his own company, McDonalds corporation
which did not include the two brothers. He made a hand
shake deal with the brothers that he would give 1 percent
profit to the brothers and 1.7 million dollars each and also he
would have control over the mcdonalds outlet in san
Bernandinos. Later he betrayed them and did not give either
of them any share In the profits.

A lot of other people started their own restaurants using the

same mechanism but only mcdonalds succeeded, its not only
the system but the name mcdonalds itself that has a grand
gesture and the people love that brand. It can be be anything
it wanted.
• McDonald's character is least understood, however. Ray Kroc was not only a
great entrepreneur, he instilled McDonald's corporate culture with a sense of
pride, fierce loyalty, fastidiousness, ferocious competitive spirit and an
appreciation for cooperation and trial-and-error methods of discovery. He set
up McDonald's on a decentralized franchising model, wherein McDonald's
allowed franchisees a wide berth of freedom to experiment with their
restaurants as they saw fit. McDonald's has often conflicted with their
franchisees but by and large treat them well and listen to their ideas for
making the corporation better. Kroc made McDonald's a success because he
gave his franchisees an incentive to innovate. The same holds for McDonald's
suppliers, which are decentralized businesses in themselves.
PRESENTED BY -

• DEEP BHALJA
• KARTIKEY YELMAR
• HAKIM THANAWALA
• ISHAN SHAH
• OVESH KHAN
• TAHA PANKHAWALA
THANK
YOU

YOU