McDonald’s started as a simple drive-in restaurant in California, but an ambitious milkshake salesman transformed it into the largest fast food empire in the world. This is the unbelievable story behind McDonald’s insane growth.
Introduction McDonald’s is now the most iconic fast food chain on the planet, with over 40,000 locations worldwide. But it came from very humble beginnings – just one small restaurant run by brothers Richard and Maurice “Mac” McDonald in San Bernardino, California.
In the 1950s, an ambitious milkshake machine salesman named Ray Kroc visited their restaurant and was blown away by their efficient “Speedee Service System.” He convinced the McDonald brothers to let him franchise the concept, which led to the rapid expansion of McDonald’s across America and eventually the world.
However, tensions grew between Kroc and the McDonald brothers over the direction of the company. Kroc had bigger visions for McDonald’s than the brothers, and he eventually maneuvered to buy them out completely and take full control of the business.
Under Kroc’s leadership, McDonald’s pioneered many innovations in fast food service, marketing, and franchising that allowed it to leave competitors like Burger King in the dust. But the road to global dominance was not without scandals, health concerns, and questionable business practices regarding the original McDonald brothers.
The Humble Origins of McDonald’s in California
In the early 20th century, the new popularity of cars in America led to a boom in drive-in restaurants, especially in sunny California. Customers loved being able to drive up, order food from their car, and have it conveniently brought out to them by waitresses on roller skates.
Brothers Richard and Maurice McDonald moved from New Hampshire to California in 1927 to try their luck in the movie business, but later turned to opening a drive-in restaurant instead. Their first restaurant, “McDonald’s Bar-B-Que,” opened in 1940 and sold mainly hot dogs.
After tweaking their concept for a few years, the brothers made a pivotal decision in 1948 to close down and re-open a redesigned restaurant focused on selling only hamburgers, fries, drinks, and milkshakes. Their new restaurant featured an innovative assembly line-style kitchen called the “Speedee Service System” that achieved unheard-of speed and efficiency in food preparation.
By focusing on a simple menu and fast service, the new McDonald’s was a huge success, attracting crowds of up to 150 cars at a time. The McDonald brothers had perfected the concept of fast food service.
Enter Ray Kroc – The Man Who Franchised McDonald’s Nationwide
In 1954, a 52-year-old milkshake machine salesman named Ray Kroc visited the San Bernardino McDonald’s and was stunned by their operation. At the time, Kroc was selling Multimixer milkshake machines and McDonald’s was one of his best customers, owning eight of his machines.
Impressed by what he saw, Kroc proposed to the McDonald brothers that he could franchise McDonald’s restaurants nationwide. The brothers were happy sticking with their single successful location, but they agreed to let Kroc handle any franchising efforts. This fateful partnership and handshake deal set the course for McDonald’s future expansion.
Kroc founded McDonald’s System Inc. as a separate company from the McDonald brothers to develop the franchising business. His first franchise opened in 1955 in Illinois, complete with the iconic Golden Arches design the brothers had created.
To support franchisees, Kroc pioneered a number of innovative business practices that were unorthodox in the franchising world at the time. He prioritized aligning the financial interests of franchisees with the parent company, even refusing to profit off selling supplies to franchisees as many franchisors did.
Kroc also recruited a talented franchise operations executive named Fred Turner to continuously improve the Speedee Service System. Together with the help of entrepreneurial franchisees, McDonald’s pioneered things like modern training systems, marketing campaigns, drive-thrus, and nationwide consistency.
The McDonald Brothers Sell Out as Tensions Rise
While McDonald’s System Inc. was busy franchising restaurants nationwide, the original San Bernardino McDonald’s was still independently owned by Richard and Maurice McDonald.
Over the years, tensions began rising between Kroc and the McDonald brothers as they started disagreeing over the direction of the company. Kroc was eager to continue rapid expansion, while the brothers were content with their single restaurant.
In 1961, Kroc bought out the McDonald brothers for $2.7 million. The brothers insisted on keeping their original San Bernardino location, which they renamed “The Big M,” but it went out of business six years later.
Kroc also opened a new McDonald’s near the brothers’ original restaurant with the sole purpose of driving them out of business. From then on, Kroc set out to open McDonald’s locations faster than ever before.
McDonald’s Innovates and Leaves Competitors Behind
In the franchise world of the 1960s and 70s, McDonald’s main competitor was Burger King. For a few years, Burger King matched McDonald’s growth by opening over 100 new restaurants a year.
But in 1967, Burger King stalled while McDonald’s accelerated expansion under the leadership of Fred Turner. Turner led McDonald’s to smashing records by opening 500+ new restaurants annually, leaving competitors far behind.
McDonald’s also innovated in marketing through campaigns targeted towards kids, the creation of mascots like Ronald McDonald, and the Happy Meal. They tapped into the entrepreneurial spirit of their franchisees to innovate new menu items and service styles.
Fred Turner also led McDonald’s to become the first fast food chain to successfully expand internationally. By adopting a strategy of keeping menus consistent but letting locals own and operate restaurants, McDonald’s exported American-style fast food to the world.
The growth was astounding. Within 20 years, McDonald’s went from having 100 total restaurants to having over 8,000! No other fast food chain came close to their dominance.
Scandals and Controversies Over Health
However, McDonald’s astounding success led to heavy public scrutiny of its practices as critics accused it of selling unhealthy food and exploiting child marketing.
In the 1990s, McDonald’s faced multiple lawsuits blaming it for health problems like obesity. But the most damaging blow came from Morgan Spurlock’s 2004 documentary Super Size Me, which documented Spurlock’s declining health as he ate only McDonald’s for a month.
The film cast McDonald’s in a negative light for selling junk food and promoting overeating. Within weeks, McDonald’s eliminated their Super Size options in damage control from the film’s damning impact.
McDonald’s also dealt with a major scandal in 2001 when a promotional Monopoly game was rigged for over a decade, stealing winning game pieces worth millions in order to give them to friends and mobster associates of the security officer in charge.
Despite controversies, McDonald’s remains the dominant force in fast food with over 38,000 restaurants worldwide. It pioneered concepts that forever changed how fast food was made and marketed.
Conclusion
The McDonald brothers started the first McDonald’s based on innovative service and simple food. But it likely would have remained just one successful restaurant without Ray Kroc’s vision. By creating the franchising systems that produced consistency and innovation on a large scale, Kroc built the framework that allowed McDonald’s to become a global empire.
However, McDonald’s rise to the top involved tension with the McDonald brothers along with health concerns and scandals. The company made pivotal contributions to shaping the modern fast food industry, although not without critics questioning the impacts. But by sticking to the core principles of quality, service, cleanliness and value, McDonald’s still thrives today.