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Grinding it out by Ray Kroc with Robert Anderson

25/10/2016

Relentless energy.
That’s the impression I formed of Ray Kroc in reading his autobiography (written with Robert Anderson) “Grinding it Out”. Kroc pioneered the franchisee model of McDonald’s which made it the global corporation it is today.  A willingness to work hard and an eager eye for an opportunity stand out in the early chapters. He describes, in the 1920s, pounding the pavement solidly from 7am until 5pm selling paper cups then playing piano at a local radio station in two shifts between 6pm and 8pm and then again from 10pm until 2am. He was doing this six times a week. He also comes across as a consumate capitalist in the way he is frequently on the lookout for a financial opportunity to capitalise on; whether seeking out new retailers for his paper cups, or devising new menu items for McDonald’s, Kroc is a man with ideas who also has the energy to implement those ideas.

This is the imperative factor for commercial success. Many of us, myself included, have idly dreamed at various stages of some great new product which will makes us rich beyond our wildest dreams but we rarely get beyond the fantasy stage. It takes extraordinary discipline, self belief, and energy to make an idea happen.

Kroc, who died in 1984, is the subject of an upcoming film entitled “The Founder” (Kroc is played by Michael Keaton) which likely explains why the book, first published in 1977, was occupying prime real estate at the University Book Shop in Dunedin when I bought it there a couple of weeks ago. “Founder” seems something of a misnomer to me because Kroc didn’t actually found McDonald’s. He did build the franchisee model but it was a pair of brothers named McDonald who actually opened and ran the first store. In 1954, Kroc stumbled across the McDonald brothers’ original restaurant when selling “Multimixer” milkshake makers to retailers. He kept getting orders from people who wanted the same Multimixer that the McDonald brothers (who had eight of the machines) had. Kroc recognised the massive potential for McDonald’s to expand because of their efficient set up producing popular food in quick time. He met with the brothers and pitched them the idea of expanding their operations by turning McDonald’s into a franchise. They were reluctant but offering his own services to help expand McDonald’s, Kroc convinced them (Kroc paid the brothers a share of corporation revenues until he ultimately bought them out). He was 52 at the time.

Kroc’s subsequent success, however, was not a flash in the pan. Rather, as he himself notes, it was the product of his thirty year sales apprenticeship up until that point. He did not just get into business as a sort of mid-life crisis induced lark. The way Kroc tells his business story, it all sounds terribly exciting as well. There are locations to find and potential franchisees to sign up. There are deals to be made with meat and bread suppliers in these locations. Some of those McDonald’s locations, even by 1977, even started to offer specialised menu items.

Localised offerings

McDonald’s today, google tells me, runs more than 36,000 stores operating in 118 countries around the world. One of the quirky features about the company is that, while it is known for its standardised offerings which means a Big Mac is a Big Mac where-ever you get it, the menu varies from place to place. McDonald’s in India, for example, does not serve beef in the majority Hindu country. Other examples of localised offerings abound. In Malaysia you can buy the Burbur Ayam McD featuring chicken on top of porridge, in Spanish McDonald’s restaurants you can buy the cold soup Gazpacho, and a Shrimp burger (I’ll pass on this one) is available in McDonald’s Korea. This is all background to the origin story of the Filet ‘O Fish which we learn in the book was actually developed because an operator in Cincinnati which had a large Catholic population in the 1960s was struggling to compete with a competitor on Fridays (there was a stricter prohibition on orthodox Catholics consuming beef on Fridays). The Filet ‘O Fish was devised to cater to those Catholics and it proved such a success that it was soon expanded to other stores.

The Free enterprise preacher

I don’t read  a lot of business biographies. The last I can recall is that of former automobile executive Lee Iacocca. I’m sure Iacocca had some worthwhile lessons to impart but my enduring memory of  his book was his desire for the US government to act to help local manufacturers deal with growing competition from Japanese carmakers. Chrysler was struggling and Iacocca managed to get a loan from the federal government to bail out the car manufacturer. Iaccoca says, in normal times, he is the first one to tell the government to get off his back but faced with international competition, he was willing to go cap in hand to Uncle Sam. Seemed hypocritical to me. Contrast this with Kroc’s remarks to an operator faced with tough competiton from a rival local hamburger operation determined to undercut the McDonald’s franchisee on price. The franchisee wants to turn to the government to initiate litigation against the competitor because his actions breached federal trade regulations. Kroc has stern words for the operator:

“The thing that has made this country great is our free enterprise system. If we have to resort to this – bringing in the government – to beat our competition, then we deserve to go broke. If we can’t do it by offering a better fifteen cent hamburger, by being better merchandisers, by providing faster service and a cleaner place, then I would rather be broke tomorrow and out of this business and start all over again in something else.”

Stirring words. And Kroc relays that the operator was inspired, picked up his game, and went on to run ten stores in the area. This sort of positive can-do attitude pervades the book. Being successful in business isn’t all just “hard work” and stirring speeches. It requires making tough decisions. Kroc relays severing ties with the McDonald brothers, who he saw as a drag on the corporation’s development, and various other executives. There is, nonetheless, something rather admirable about the energy and enthusiasm Kroc displays which is at the heart of an imaginative capitalist endeavour. Through the decentralised franchisee model, McDonald’s has become an epitome of popular capitalism. If there is an aspiring businessman or woman close to you, they could do worse than to read “Grinding it Out” for inspiration.

PPS: Here’s Business Insider’s list of some of those quirky offerings on McDonald’s menus round the world.

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