Lessons from the McDonald’s Story
If you’re a fan of Struggling-Sweaty-Salesmen-Make-Good movies, or curious about people who can recognize and capitalize on unique opportunities, you won’t want to miss The Founder. It stars Michael Keaton in a biographical drama about Ray Kroc of McDonald’s fame that will have you cheering and jeering for two entertaining hours.
The Founder was the title Kroc had printed under his name on his business cards.
Those two words spiked the blood pressure of original McDonald’s restaurant founders – brothers Richard and Maurice McDonald – who spent most of the movie seething on the other end of a telephone line as their franchise partner Ray badgered them with relentless innovation ideas. They continually resisted in defense of quality and integrity.
These two nice guys hesitated and finished last with only a few million bucks in their pockets (as opposed to Kroc’s $500 million wad).
It will break your heart to see the brothers’ revolutionary restaurant concept hijacked by a Type “A” personality who is continually on the hunt for new ideas, processes, and business models. Ambition and vision win the day, but there are casualties along the way. And a lot of lessons learned.
Here are some of my takeaways:
Follow your instincts. If something you see or hear stops you in your tracks and appears to be something you’ve never seen or heard before, pay attention. In Kroc’s case, it was his first visit to the McDonald’s restaurant operation in San Bernadino, California. Fast service. Family atmosphere. Delicious burgers. No plates or utensils, just paper bags and wraps.
Guard your intellectual property. Much as I loved the McDonald brothers, they gave away the store. They freely shared all their secrets, innovations, branding and growth strategies with Kroc and he took the burger and ran.
Hire hungry people. Kroc’s first investors were his country club friends. They were basically parking their money and didn’t really care about the consistency of the brand. He moved on to hardworking door-to-door salesmen, church and synagogue groups, service club members...and their wives...and built a franchise system of strong, well-trained, invested managers who made more money for their families than they ever dreamed possible.
Protect your brand. Your company name should stand for something. Kroc revered the “McDonald’s” name. To him, it embodied everything that was good and right about America. He built his brand around that vision and his franchisees and customers bought into it. He delivered on the promise.
Never stop innovating: Powdered milkshakes to save on freezer energy costs. Limited menu selections to ensure consistent quality. Unique processes to speed up service. Hiring instincts and training at odds with convention. Kroc was a visionary. An entrepreneur with little patience for the status quo.
Know what business you’re really in: It took a lawyer to enlighten Kroc that he was in the real estate business, not food service. Own the land that the restaurants sit on and start raking in the cash from day one. He did just that and it fueled the financing he needed to grow the business globally.
Get it in writing: When Kroc finally renegotiated his deal with the McDonald brothers, giving him full control, instead of signing a contract awarding them their demand of 1% of annual profits, he convinced the exhausted siblings to “shake on it.” They did and never received another penny (royalties estimated at $100 million/year).
Persevere. Your day is coming. But only if you hang in, keep your eyes open, accept advice, and aren’t afraid to take risks or fail.
Play fair. The McDonald brothers did and they lost financially but they never compromised their integrity.
Sometimes when you lose, you win.