There are few more successful franchises in the world than McDonald’s. From the brand featuring the golden arches to the fact every kid in America wants to go, McDonald’s has become a global success story. In the movie “The Founder” with Michael Keaton as Ray Kroc, we learn a few business principles that we can admire and a few we should probably ignore.
Ray Kroc was a genius who turned someone else’s small vision into an empire. The original McDonalds brothers only wanted to have a modest burger restaurant with a few franchises (most of which initially failed), even though the process they developed at their first location in San Bernadino, CA (which is now a museum) was innovative and became a model for the term “fast food.”
Here are a few things that every business owner or aspiring entrepreneur should take away from this “mostly” accurate film and a few you shouldn’t. (The movie was largely accurate except that it made it appear the brothers felt they were ripped off in the eventual Kroc buyout of their company. In fact, Kroc made them millionaires. They were pleased with their business parachute, so much so that one of the brothers participated years later in a McDonald’s anniversary campaign.).
- Know how to sell. Kroc was incredibly persistent. He started in the business by selling shake mixers out of his car, which honed his craft, and then that sales acumen gave him the skills to sell to investors, franchisees, and eventually the public. If you’re not a salesman – hire someone who is. Build a different business if you’re not comfortable selling what you’re creating, from getting bank loans to hiring to selling your product or service. As a business owner, you have to be constantly selling your vision.
- Innovate and Experiment. Kroc loved what the brothers had built, but when they kept shutting down his ideas and innovations, he came up with a novel idea: Own the land the restaurants sit on. Even today, McDonald’s is one of the largest landowners in the country. The company now owns about 45% of the land and 70% of the buildings at their 36,000+ locations, with the rest being leased. Kroc’s idea was sheer genius as he realized that collecting on rents helped insulate him and the eventual company from burger sales fluctuations.
- Build an Identifiable Brand. Is there anything more identifiable than the golden arches? Kroc saw the initial drawings from the McDonalds brothers, which were never actually put into practice, and ran with it. Without their blessing. Every store was the same. Same colors. Same golden arches. Same burgers. Any person in the U.S. can sit down with a piece of paper and draw what a McDonald’s store looks like. Now that’s iconic.
- Don’t be afraid to make changes and innovate. While, in reality, the Kroc decision to save money by making McDonald’s shakes without dairy was not precisely accurate, there are a lot of examples in the film about his veering from what the McDonalds brothers envisioned to make things not just better but more economical and efficient.
- Be Persistent AND Patient. In a microwave world, we tend to give up too early on concepts and ideas. Kroc never quit. He fought the owners, banks, and public opinion to develop his eventual hallmark of success. He was the first Blue Ocean (one of my favorite business books) and decided he wasn’t going to compete with other restaurants, he was going to create his own way of doing things (his own blue ocean) so he would have no real rival. Quicker, cleaner and cheaper. No one ever did things his way before and probably never will again. He was Elon Musk and, unfortunately, sometimes personally just as creepy …
Case in point and things you should be wary of when starting a company
- Don’t hide things from your spouse. Kroc’s second wife was totally in the dark about his work and what he was doing, and not once (at least according to the movie) did he ever consult her or ask for her opinion about his business dealings. That may have been more indicative of life in the ’50s, but it’s still a lousy business. And it cost him another marriage (before he stole his third and final wife from a franchisee. I won’t get into that here.)
- Get some people around you who say no. Ray Kroc didn’t like the word no. He didn’t listen to his wife and he didn’t listen to the McDonalds brothers. Every entrepreneur needs checks and balances and though not documented in the movie, I’m sure there were plenty of times he could have done things more efficiently if he had people around him who dared to say no.
Don’t be afraid to think about the communities you serve. Ray Kroc’s legacy is imperfect. No doubt he had many personal failings and history will have to be the judge if the ends justify the means i.e., his success versus the unadulterated ruthlessness in which he acquired it. After his death, though, his third wife, Joan, increased her philanthropy. Upon her death, her estate was apportioned to various nonprofits, including the Salvation Army and other community centers across the country.