Grinding It Out Read online

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  My wife, Joni, shares with me the enjoyment of dedicating this book to all our friends in the McDonald’s family who have helped so greatly in this enterprise.

  He searches through his competitors’ garbage cans—he scolds his San Diego Padres over the P.A. system—he either enchants or antagonizes everyone he meets. But even his enemies agree there are three things Ray Kroc does damned well: sell hamburgers, make money, and tell stories.

  Preface

  “Opportunity is dead in the United States!” “The tax structure has destroyed all incentive!” How often we have heard such laments during the past thirty years, when in fact greater fortunes have been made and higher living standards achieved than ever before on earth!

  Those of us who teach courses at graduate schools of business, courses with titles like Entrepreneurship or New Enterprise Management, know that such gloom is unfounded. We have case studies based on true examples of individual success and corporate growth to prove it.

  Every now and then a unique and vibrant personality like Ray A. Kroc comes along, a flesh-and-blood example of a Horatio Alger story, who illustrates in practice what one is preaching and who repudiates the lamenters entirely. Grinding It Out, Ray Kroc’s autobiography and the history of McDonald’s Corporation, is a dramatic refutation of all who believe that risk takers will no longer be properly rewarded. It reminds us that opportunity abounds, that all one needs is the knack of seizing the chances that exist, of being in the right place at the right time. A little bit of luck helps, yes, but the key element, which too many in our affluent society have forgotten, is still hard work—grinding it out.

  Ray Kroc visited our classes at the Amos Tuck School of Business Administration on the Dartmouth College Campus in 1974 and returned two years later in March 1976, bringing with him several key members of his corporate team including Fred Turner, McDonald’s President and Chief Executive Officer. (The very circumstances of that second visit proved the quality of energy and determination that has marked his business career, for when a major snowstorm closed down the airports in our area, the undaunted Mr. Kroc commandeered a McDonald’s bus from his Boston headquarters to drive the stranded executives through the storm.)

  With his utter frankness Ray Kroc thoroughly disarmed his audience of sophisticated MBA candidates. On both visits he regaled students with the story of his life and the history of McDonald’s, reporting in capsule version all that is spelled out in fuller detail in this autobiography. He fielded all questions that students put to him, exhibiting in his lectures and discussions the qualities which have made him a present-day commercial legend: his tough-minded business philosophy; his virtually compulsive adherence to the fundamental operating strategies designed to attract the family market; his emphasis on such basic qualities as courtesy, cleanliness, and service; and his abiding loyalty to his associates, particularly to those who have served McDonald’s since its fledgling years. His talks displayed his humor, competitive zeal, dedication to hard work, and his firm belief that in the United States a person can reach or exceed any reasonable goal. Mr. Kroc is one of the rare individuals who possesses both the charisma of an extraordinary leader who is a great salesman and the passion for detail of an able administrator.

  You do not need to hear Ray Kroc speak for long before realizing that Grinding It Out, the title he has chosen for his autobiography, is not a humorous reference to the preparation of McDonald’s most famous product. Instead, the title brings to mind the long apprenticeship of over thirty years during which Mr. Kroc worked for others as a salesman and sales manager and later in his own small business. For the great opportunity of his life did not come until 1954 when he was fifty-two, an age when some executives are beginning to contemplate the greener pastures of retirement. Grinding It Out also appropriately reminds the reader of the staggering investments of time, energy, and capital that were required to develop McDonald’s to its current preeminence in the fast food service and franchising industries.

  This historic year of 1976 will see McDonald’s Corporation surpass one billion dollars in total revenue for the first time. Casual students of business history may not realize the significance of the fact that this milestone will be reached during the twenty-second year of the company’s history. To put this accomplishment in some perspective, the reader should be reminded that IBM, highly renowned as a growth company, did not achieve the one-billion-dollar sales mark until its forty-sixth year, 1957. And Xerox, another corporation famous for its growth, took sixty-three years before making the billion-dollar club in 1969. Polaroid has yet to attain annual sales of a billion dollars although the corporation was founded in 1937. Despite the changes in price levels since Xerox Corporation was founded in 1906, these statistics on sales or total revenue do provide some sense of proportion to the corporate history of McDonald’s and its unprecedented growth.

  Though the business history of McDonald’s is fascinating in and of itself, it is only one facet of Grinding It Out. For the practices pioneered or perfected by McDonald’s under Ray Kroc’s leadership have revolutionized an entire food service industry, changed eating habits throughout the world, and raised customer expectations. Who among us is not now less tolerant of slow service, overpriced meals, soggy french fries, or a lack of cleanliness in eating places?

  Mr. Kroc’s book is not only a fascinating memoir, it is a welcome addition to the literature available to students of business in general. Grinding It Out will be uniquely valuable to those who aspire to build their own enterprise, whether the potential founder is in his or her late teens, early fifties, or at any age in between.

  —Paul D. Paganucci

  Associate Dean and Professor of Business Administration

  Amos Tuck School of Business Administration

  Dartmouth College

  Hanover, New Hampshire

  June 29, 1976

  1

  There is a tide in the affairs of men,

  Which, taken at the flood, leads on to fortune;

  Omitted, all the voyage of their life

  Is bound in shallows and in miseries.

  On such a full sea are we now afloat,

  And we must take the current when it serves,

  Or lose our ventures.

  —Shakespeare, Julius Caesar

  I have always believed that each man makes his own happiness and is responsible for his own problems. It is a simple philosophy. I think it must have been passed along to me in the peasant bones of my Bohemian ancestors. But I like it because it works, and I find that it functions as well for me now that I am a multimillionaire as it did when I was selling paper cups for thirty-five dollars a week and playing the piano part-time to support my wife and baby daughter back in the early twenties. It follows, obviously, that a man must take advantage of any opportunity that comes along, and I have always done that, too. After seventeen years of selling paper cups for Lily Tulip Cup Company and climbing to the top of
the organization’s sales ladder, I saw opportunity appear in the form of an ugly, six-spindled milk shake machine called a Multimixer, and I grabbed it. It wasn’t easy to give up security and a well-paying job to strike out on my own. My wife was shocked and incredulous. But my success soon calmed her fears, and I plunged gleefully into my campaign to sell a Multimixer to every drug store soda fountain and dairy bar in the nation. It was a rewarding struggle. I loved it. Yet I was alert to other opportunities. I have a saying that goes, “As long as you’re green you’re growing, as soon as you’re ripe you start to rot.” And I was as green as a Shamrock Shake on St. Patrick’s Day when I heard about an incredible thing that was happening with my Multimixer out in California.

  The vibrations came in calls from voluntary prospects in different parts of the country. One day it would be a restaurant owner in Portland, Oregon; the next day a soda fountain operator in Yuma, Arizona; the following week, a dairy-bar manager in Washington, D.C. In essence, the message was always the same, “I want one of those mixers of yours like the McDonald brothers have in San Bernardino, California.” I got curiouser and curiouser. Who were these McDonald brothers, and why were customers picking up on the Multimixer from them when I had similar machines in lots of places? (The machine, by this time had five spindles instead of six.) So I did some checking and was astonished to learn that the McDonalds had not one Multimixer, not two or three, but eight! The mental picture of eight Multimixers churning out forty shakes at one time was just too much to be believed. These mixers sold at $150 apiece, mind you, and that was back in 1954. The fact that this was taking place in San Bernardino, which was a quiet town in those days, practically in the desert, made it all the more amazing.

  I flew out to Los Angeles one day and made some routine calls with my representative there. Then, bright and early the next morning, I drove the sixty miles east to San Bernardino. I cruised past the McDonald’s location about 10 A.M., and I was not terrifically impressed. There was a smallish octagonal building, a very humble sort of structure situated on a corner lot about 200 feet square. It was a typical, ordinary-looking drive-in. As the 11 o’clock opening time approached, I parked my car and watched the helpers begin to show up—all men, dressed in spiffy white shirts and trousers and white paper hats. I liked that. They began to move supplies from a long, low shed at the back of the property. They trundled four-wheeled carts loaded with sacks of potatoes, cartons of meat, cases of milk and soft drinks, and boxes of buns into the octagonal building. Something was definitely happening here, I told myself. The tempo of their work picked up until they were bustling around like ants at a picnic. Then the cars began to arrive, and the lines started to form. Soon the parking lot was full and people were marching up to the windows and back to their cars with bags full of hamburgers. Eight Multimixers churning away at one time began to seem a lot less far-fetched in light of this steady procession of customers lockstepping up to the windows. Slightly dazed but still somewhat dubious, I got out of my car and took a place in line.

  “Say, what’s the attraction here?” I asked a swarthy man in a seersucker suit who was just in front of me.

  “Never eaten here before?” he asked.

  “Nope.”

  “Well, you’ll see,” he promised. “You’ll get the best hamburger you ever ate for fifteen cents. And you don’t have to wait and mess around tipping waitresses.”

  I left the line and walked around behind the building, where several men were hunkered down in the shade baseball-catcher style, resting their backs against the wall and gnawing away on hamburgers. One wore a carpenter’s apron; he must have walked over from a nearby construction site. He looked up at me with an open, friendly gaze, so I asked him how often he came there for lunch.

  “Every damned day,” he said without a pause in his chewing. “It sure beats the old lady’s cold meatloaf sandwiches.”

  It was a hot day, but I noticed that there were no flies swarming around the place. The men in the white suits were keeping everything neat and clean as they worked. That impressed the hell out of me, because I’ve always been impatient with poor housekeeping, especially in restaurants. I observed that even the parking lot was being kept free of litter.

  In a bright yellow convertible sat a strawberry blond who looked like she had gotten lost on her way to the Brown Derby or the Paramount cafeteria. She was demolishing a hamburger and a bag of fries with a demure precision that was fascinating. Emboldened by curiosity, I approached her and said I was taking a traffic survey.

  “If you don’t mind telling me, how often do you come here?” I asked.

  “Anytime I am in the neighborhood,” she smiled. “And that’s as often as possible, because my boyfriend lives here.”

  Whether she was teasing or being candid or simply using the mention of her boyfriend as a ploy to discourage this inquisitive middle-aged guy who might be a masher, I couldn’t tell, and I cared not at all. It was not her sex appeal but the obvious relish with which she devoured the hamburger that made my pulse begin to hammer with excitement. Her appetite was magnified for me by the many people in cars that filled the parking lot, and I could feel myself getting wound up like a pitcher with a no-hitter going. This had to be the most amazing merchandising operation I had ever seen!

  I don’t remember whether I ate a hamburger for lunch that day or not. I went back to my car and waited around until about 2:30 in the afternoon, when the crowd dwindled down to just an occasional customer. Then I went over to the building and introduced myself to Mac and Dick McDonald. They were delighted to see me (“Mr. Multimixer” they called me), and I warmed up to them immediately. We made a date to get together for dinner that evening so they could tell me all about their operation.

  I was fascinated by the simplicity and effectiveness of the system they described that night. Each step in producing the limited menu was stripped down to its essence and accomplished with a minimum of effort. They sold hamburgers and cheeseburgers only. The burgers were a tenth of a pound of meat, all fried the same way, for fifteen cents. You got a slice of cheese on it for four cents more. Soft drinks were ten cents, sixteen-ounce milk shakes were twenty cents, and coffee was a nickel.

  After dinner, the brothers took me over to visit their architect, who was just completing work on the design of a new drive-in building for them. It was neat. The building was red and white with touches of yellow, and had snazzy looking oversized windows. It had some improved serving area features over those being used in the McDonald’s octagonal structure. And it had washrooms in back. In the existing building, customers had to walk to the back of the lot to the long, low building that was a combination warehouse, office, and washrooms. What made the new building unique was a set of arches that went right through the roof. There was a tall sign out front with arches that had neon tubes lighting the underside. I could see plenty of problems there. The arches of the sign looked like they would topple over in a strong wind, and those neon lights would need constant attention to keep them from fading out and looking tacky. But I liked the basic idea of the arches and most of the other features of the design, too.

  That night in my motel room I did a lot of heavy thinking about what I’d seen during the day. Visions of McDonald’s restaurants dotting crossroads all over the country paraded through my brain. In each store, of course, were eight Multimixers whirring away and paddling a steady flow of cash into my pockets.

  The next morning I got up with a plan of action in mind. I was on the scene when McDonald’s windows opened for business. What followed was pretty much a repeat of the scenario that had played the previous day, but I watched it with undiminished fascination. I observed some things a lot more closely, though, and with more awareness, thanks to my conversation with the McDonald brothers. I noted how the griddleman handled his job; how he slapped the patties of meat down when he turned them, and how he kept the sizzling griddle surface scraped. But I paid particular attention to the french-fry operation. The brothers had indicated
this was one of the key elements in their sales success, and they’d described the process. But I had to see for myself how it worked. There had to be a secret something to make french fries that good.

  Now, to most people, a french-fried potato is a pretty uninspiring object. It’s fodder, something to kill time chewing between bites of hamburger and swallows of milk shake. That’s your ordinary french fry. The McDonald’s french fry was in an entirely different league. They lavished attention on it. I didn’t know it then, but one day I would, too. The french fry would become almost sacrosanct for me, its preparation a ritual to be followed religiously. The McDonald brothers kept their potatoes—top quality Idaho spuds, about eight ounces apiece—piled in bins in their back warehouse building. Since rats and mice and other varmints like to eat potatoes, the walls of the bins were of two layers of small-mesh chicken wire. This kept the critters out and allowed fresh air to circulate among the potatoes. I watched the spuds being bagged up and followed their trip by four-wheeled cart to the octagonal drive-in building. There they were carefully peeled, leaving a tiny proportion of skin on, and then they were cut into long sections and dumped into large sinks of cold water. The french-fry man, with his sleeves rolled up to the shoulders, would plunge his arms into the floating schools of potatoes and gently stir them. I could see the water turning white with starch. This was drained off and the residual starch was rinsed from the glistening morsels with a flexible spray hose. Then the potatoes went into wire baskets, stacked in production-line fashion next to the deep-fry vats. A common problem with french fries is that they’re fried in oil that has been used for chicken or for some other cooking. Any restaurant will deny it, but almost all of them do it. A very small scandal, perhaps, but a scandal nonetheless, and it’s just one of the little crimes that have given the french fry a bad name while ruining the appetites of countless Americans. There was no adulteration of the oil for cooking french fries by the McDonald brothers. Of course, they weren’t tempted. They had nothing else to cook in it. Their potatoes sold at ten cents for a three-ounce bag, and let me tell you, that was a rare bargain. The customers knew it, too. They bought prodigious quantities of those potatoes. A big aluminum salt shaker was attached to a long chain by the french-fry window, and it was kept going like a Salvation Army girl’s tambourine.