Ray Kroc didn’t open the first McDonalds, but he did make it a household name.  He was born on October 5th, 1902 in Chicago.  At the age of four he was taken to a phrenologist (a fortune teller who makes predictions based on the shape of your skull) and was told he would work in food service.

At age 15 he lied about his age and began training to drive ambulances for the Red Cross during World War One, along side Walt Disney.  But the war ended on his last day of training so he never got to test out his new skills.  He eventually started selling paper cups by day and playing the piano by night.  Then one day he had a meeting with Earl Prince, who was buying paper cups by the truckload.  Mr. Prince had developed a machine that could make 5 milkshakes at once.  Ray convinced Earl to give him exclusive rights to sell the machine.  Ray sold the milkshake machine for 17 years.

While working as a milkshake machine salesman he became familiar with the restaurant business.  He worked with many restaurants and got a feel for what worked, and what didn’t.  One of his best customers were the McDonald brothers.  Ray had sold them 8 milkshake machines.  Which meant they could make up to 40 milkshakes at a time.  Ray was intrigued by this.  When he visited the establishment he was impressed with its efficiency.  The brothers had set up an assembly line system to serve their hamburgers.  Ray knew that he could sell his milkshake machines to every McDonalds restaurant but the brothers were not interested in expanding their business.  Refusing to take no for an answer, Ray offered to open another McDonalds himself.  The brothers agreed, thereby forming the McDonalds Corporation.  Ray later noted, “I was 52 years old. I had diabetes and incipient arthritis. I had lost my gall bladder and most of my thyroid gland in earlier campaigns, but I was convinced that the best was ahead of me.”  He was right.

Kroc knew the key to McDonalds success was to run the restaurant with great efficiency and consistency.  He wanted every experience to be the same no matter where he opened a store.  He broke the food preparation into steps that could be repeated in every store.  Cleanliness was also of utmost importance, from the parking lot to the kitchen floor.  He knew the that land on which the restaurants sat was extremely valuable.  He would buy the land and lease it back to the franchisee.  By 1960 there were 200 McDonalds restaurants.   In 1961, he offered to buy the company from the brothers at a price of their setting.  The brothers asked for $2.7 million.  The one catch in the deal was that the McDonald brothers wanted to keep their original store, which had been renamed “Big M”.  This infuriated Kroc.  He retaliated by opening a McDonalds one block north of the Big M and successfully put it out of business within two years.  This may seem extreme, but he was a fiercely competitive man.  What else do you expect of a man who once said, “If my competitor was drowning I would stick a hose in his mouth and turn on the water.”

He ran the company for another seven years before handing the operations over to Fred Turner in 1968.  In 1974 he bought the San Diego Padres in order to prevent them from being transferred to Washington D.C.

Ray Kroc died in January 1984, at age 81, just 10 months before McDonalds sold its 50 billionth hamburger.  He was worth $500 million.

financial inspiration

Other Self Made Men in the series:
Warren Buffett
Henry Ford
Ingvar Kamprad
Sam Walton
Thomas Edison
Oprah Winfrey
Steve Jobs

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