Raymond Albert Kroc (October 5, 1902 – January 14, 1984) was an American businessman. He joined McDonald’s in 1954 and built it into the most successful fast food operation in the world. Kroc was included in Time 100: The Most Important People of the Century, and amassed a fortune during his lifetime. He owned the San Diego Padres baseball team from 1974 until his death in 1984.
Kroc was born on October 5, 1902 in Oak Park, Illinois, near Chicago, to parents of Czech origin, Rose Mary (Hrach) and Alois “Louis” Kroc. His father was from the village of Břasy near Plzeň, Bohemia (now the Czech Republic).
He grew up and spent most of his life in Oak Park. During the First World War, he lied about his age and became a Red Crossambulance driver at 15, though the war ended and he was not shipped overseas.
After the Second World War, Kroc found employment as a milk shake mixer salesman for Prince Castle. When Prince Castle Multi-Mixer sales plummeted because of competition from lower-priced Hamilton Beach products, Kroc took note of the McDonald brothers who had purchased six of his Multi-Mixers. Immediately after visiting the San Bernardino store in 1955, Kroc became convinced that the setup of this small chain had the potential to explode across the nation. He offered his services to the McDonald brothers, who were looking for a new franchising agent following the departure of agent Bill Tansey due to health issues.
Kroc opened the first restaurant of McDonald’s, Inc. in Des Plaines, Illinois. Kroc remained active in Des Plaines until the end of his life, frequently phoning the manager of the store across the street to remind him to clean his restaurant properly. The Des Plaines location boomed, bringing in hundreds of dollars on its opening day. Kroc franchised out scores of restaurants to franchisees. The brothers were satisfied with the money they had, and did not feel a need to expand their empire.
Kroc has been credited with making a number of innovative changes in the food-service franchise model. Chief among them was the sale of only single-store franchises instead of selling larger, territorial franchises which was common in the industry at the time. Kroc recognized that the sale of exclusive licenses for large markets was the quickest way for a franchisor to make money. But he also saw in the practice a loss in the franchisor’s ability to exert control over the course and direction of a chain’s development. Above all else, Kroc wanted uniformity in service and quality among all of the McDonald’s locations. Without the ability to influence franchisees, Kroc knew that it would be difficult to achieve that goal. By granting a franchisee the right to only one store location at a time, Kroc retained for the franchise some measure of control over the franchisee, or at least those desiring to someday own the rights to another store.
Kroc became frustrated with the brothers’ desire to maintain a small number of restaurants. The McDonald brothers also consistently told Kroc that he could make changes to things like the original blueprint (building codes were different in Illinois than in California), but despite Kroc’s pleas, the brothers never sent any formal letters which legally allowed the changes in the chain. In 1961, he bought the company for $2.7 million – enough to pay each brother $1 million after taxes- plus an annual royalty of 1.9% (when negotiating the contract, the McDonald brothers said that 2% sounded greedy; 1.9% was more attractive).
The agreement was a handshake with split agreement between the parties because Kroc insisted that he could not show the royalty to the investors he had lined up to capitalize his purchase. At the closing table, Kroc became annoyed that the brothers would not transfer to him the real estate and rights to the original unit. The brothers had told Kroc that they were giving the operation, property and all, to the founding employees. Kroc closed the transaction, then refused to acknowledge the royalty portion of the agreement because it was not in writing. Kroc also opened a new McDonald’s restaurant near the original McDonald’s (now renamed “The Big M” as they had neglected to retain rights to the name) to force it out of business.
After finalizing the agreement with the McDonald Brothers, Kroc sent a letter to Walt Disney. They had met as ambulance attendant trainees at Sound Beach, Connecticut during the First World War. Kroc wrote, “I have very recently taken over the national franchise of the McDonald’s system. I would like to inquire if there may be an opportunity for a McDonald’s in your Disney Development”. According to one account, Disney agreed under stipulation to increase fries from ten cents to fifteen cents allowing himself the profit. Kroc refused to gouge his loyal customers, leaving Disneyland to open without a McDonald’s restaurant. Journalist Eric Schlosser, writing in his book Fast Food Nation, believes that this is a doctored retelling of the transaction by some McDonald’s marketing executives. Most probably, the proposal was returned without approval.
Kroc maintained the assembly line “Speedee Service System” for hamburger preparation, which was introduced by the McDonald brothers in 1948. He standardized operations, ensuring every burger would taste the same in every restaurant. He set strict rules for franchisees on how the food was to be made, portion sizes, cooking methods and times, and packaging. Kroc also rejected cost-cutting measures like using soybean filler in the hamburger patties. These strict rules also were applied to customer service standards with such mandates that money be refunded to clients whose orders were not correct or to customers who had to wait more than five minutes for their food. However, Kroc let the franchisees decide their best approach to marketing the products. For example, Willard Scott created the figure now known internationally as Ronald McDonald to improve sales in the Washington, D.C. metropolitan area.
By the time of Kroc’s death, the chain had 7,500 outlets in the United States and 31 other countries and territories. The total systemwide sales of its restaurants were more than $8 billion in 1983.
In 1974, Kroc decided to retire from being CEO of McDonald’s. While he was looking for new jobs, he decided to get back into baseball, his lifelong favorite sport, when he learned that the San Diego Padres were for sale. The team had been conditionally sold by founding owner C. Arnholt Smith to Washington grocery-chain owner Joseph Danzansky, who planned to move the Padres to Washington. However, the sale was tied up in lawsuits when Kroc purchased the team for $12 million, keeping the team in San Diego. In Kroc’s first year of ownership in 1974, the Padres lost 102 games, yet drew over one million in attendance, the standard of box office success in the major leagues during that era. Their previous top attendance was 644,772 in 1972. The San Diego Union said Kroc was “above all, a fan of his team”. On April 9, 1974, while the Padres were on the brink of losing a 9-5 decision to the Houston Astros in the season opener at San Diego Stadium, Kroc took the public address microphone in front of 39,083 fans. “I’ve never seen such stupid ballplaying in my life,” he said. The crowd cheered in approval. In 1979, Kroc’s public interest in future free agent players Graig Nettles and Joe Morgan drew a $100,000 fine from Commissioner Bowie Kuhn. Frustrated with the team, he handed over operations of the team to his son-in-law, Ballard Smith. “There’s more future in hamburgers than baseball,” Kroc said.
After his death, the Padres in 1984 wore a special patch RAK. They would win the NL pennant that year and play in the 1984 World Series.
Kroc was inducted posthumously as part of the inaugural class of the San Diego Padres Hall of Fame in 1999.
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