Grinding It Out (10 page)

The San Bernardino restaurant was a typical drive-in. It developed a terrific business, especially among teenagers. But after World War II, the brothers realized they were running hard just to stay in one place. They weren't building volume even though their parking lot was always full. So they did a courageous thing. They closed that successful restaurant in 1948 and reopened it a short time later with a radically different kind of operation. It was a restaurant stripped down to the minimum in service and menu, the prototype for legions of fast-food units that later would spread across the land. Hamburgers, fries, and beverages were prepared on an assembly line basis, and, to the amazement of everyone, Mac and Dick included, the thing worked! Of course, the simplicity of the procedure allowed the McDonalds to concentrate on quality in every step, and that was the trick. When I saw it working that day in 1954, I felt like some latter-day Newton who'd just had an Idaho potato caromed off his skull.

So I asked Dick McDonald—when he wondered aloud who they'd get to open a lot of similar restaurants for them—“What about me?” The response seemed to surprise him and his brother momentarily. But then they brightened and began discussing this proposal with increasing enthusiasm. Before long we decided to get their lawyer involved and draw up an agreement.

In the course of this conversation I learned that the brothers had licensed ten other drive-ins, including two in Arizona. I had no interest in those, but I would have rights to franchise copies of their operations everywhere else in the United States. The buildings would have to be exactly like the new one their architect had drawn up with the golden arches. The name, McDonald's, would be on all of them, of course, and I was one hundred percent in favor of that. I had a feeling that it would be one of those promotable names that would catch the public fancy. I was for the contractual clauses that obligated me to follow their plans down to the last detail, too—even to signs and menus. But I should have been more cautious there. The agreement was that I could not deviate from their plans in my units unless the changes were spelled out in writing, signed by both brothers, and sent to me by registered mail. This seemingly innocuous requirement created massive problems for me. There's an old saying that a man who represents himself has a fool for a lawyer, and it certainly applied in this instance. I was just carried away by the thought of McDonald's drive-ins proliferating like rabbits with eight Multimixers in each one. Also, I was swayed by the affable openness of the McDonald brothers. The meeting was extremely cordial. I trusted them from the outset. That trust later would turn to bristling suspicion. But I had no inkling of that eventuality.

The agreement gave me 1.9 percent of the gross sales from franchisees. I had proposed 2 percent. The McDonalds said, “No, no, no! If you tell a franchisee you are going to take two percent, he'll balk. It sounds too full and rounded. Make it one and nine-tenths, and it sounds like a lot less.” So I humored them on that one. The brothers were to get .5 percent out of my 1.9 percent. This seemed fair enough, and it was. If they had played their cards right, that .5 percent would have made them unbelievably wealthy. But as my Grandpa Phossie used to say, “There's many a slip twixt the cup and the lip.” Another aspect of the agreement was that I was to charge a franchise fee of $950 for each license. This was to cover my expenses in finding a suitable location and a landlord who would be willing to build to our specifications. Each license was to run for twenty years. My contract with the McDonalds was only for ten years. That was later amended to ninety-nine years.

I've often been asked why I didn't simply copy the McDonald brothers' plan. They showed me the whole thing and it would have been an easy matter, seemingly, to pattern a restaurant after theirs. Truthfully, the idea never crossed my mind. I saw it through the eyes of a salesman. Here was a complete package, and I could get out and talk up a storm about it. Remember, I was thinking more about prospective Multimixer sales than hamburgers at that point. Besides, the brothers did have some equipment that couldn't be readily copied. They had a specially fabricated aluminum griddle for one thing, and the set-up of all the rest of the equipment was in a very precise, step-saving pattern. Then there was the name. I had a strong intuitive sense that the name McDonald's was exactly right. I couldn't have taken the name. But for the rest of it, I guess the real answer is that I was so naive or so honest that it never occurred to me that I could take their idea and copy it and not pay them a red cent.

I was elated with the deal I'd struck, and I wanted to tell someone about it right away, so I dropped in to visit Marshall Reed, my former secretary at Lily Tulip Cup. Marsh had served in the army during World War II. He went back to selling paper cups for a time after the war, but then he married a wealthy widow and retired to California. He was glad to see me, as always, and we had an interesting talk about my new venture. Since I was committed to it, he didn't tell me what was really on his mind until years later: “I thought you'd gone soft in the head … was this a symptom of the male menopause?… I asked myself, ‘What is the president of Prince Castle Sales doing running a fifteen-cent hamburger stand?'” Good old Marsh. He'd never step on another man's happiness.

Others were less kind.

Ethel was incensed by the whole thing. We had no obligations that would be jeopardized by it; our daughter, Marilyn, was married and no longer dependent on us. But that didn't matter to Ethel; she just didn't want to hear about the McDonalds or my plans. I had done it again, and once too often as far as she was concerned. The quarrels we'd had when I took over Prince Castle and then when I'd extended the mortgage on our house to buy out John Clark were mere preludes to this one. This was a veritable Wagnerian opera of strife. It closed the door between us. She dutifully attended McDonald's gatherings in later years, and she was liked by operators' wives and by women on the staff, but there was nothing more between us. Our thirty-five years of holy matrimony endured another five in unholy acrimony.

I had no time to bother with emotional stress, though. I had to find a site for my first McDonald's store and start building. I needed to get a location that I could establish as a model for others to follow. My plan was to oversee it in my spare time from the Prince Castle business. That meant it would have to be situated near my home or near my office, and downtown Chicago was impossible for a number of reasons. Finally, with the help of a friend named Art Jacobs, who went in fifty-fifty with me on it, I found a lot that seemed just right. It was in Des Plaines, a seven-minute drive from my home and a short walk from the Northwestern Railroad Station, from where I could commute to the city.

My troubles started the minute I got together with my contractor and went over with him the plans furnished by the McDonald's architect. That structure was designed for a semidesert location. It was on a slab, no basement, and it had a swamp cooler on the roof.

“Where am I going to put the furnace, Mr. Kroc?” he asked.

“Damned if I know. What do you suggest?”

He suggested a basement, pointing out that other arrangements would be far less efficient and that I would need a basement for storage anyhow. I couldn't just leave my potatoes outdoors as the McDonalds did, for example, and there was no room for a back building on this lot, even if I'd wanted one, which I didn't.

So I called the McDonald boys and told them about my problem.

“Well, sure you need a basement,” they said. “So build one.”

I reminded them that I had to have it documented by a registered letter. They pooh-pooed it; said it was all right to go ahead, they weren't much good at writing letters and they couldn't afford to hire a secretary. Actually they probably could have hired the entire typing pool at IBM if they'd had a mind to. I hung up hoping that they would have second thoughts and send me written confirmation, but they never did.

It was a messy way to start, being in default on the first unit, but there was no choice. I went ahead with the building, telling myself that when I got breathing space I would fly out to see the McDonalds and get all the contractual wrinkles ironed out at once. That would have worked, had the McDonalds been reasonable men. Instead, they were obtuse, they were utterly indifferent to the fact that I was putting every cent I had and all I could borrow into this project. When we sat down with our lawyers in attendance, the brothers acknowledged the problems but refused to write a single letter that would permit me to make changes.

“We have told you by telephone that you may go ahead and alter the plans as we discussed,” said their attorney, Frank Cotter.

“But the contract calls for a registered letter. If Mr. Kroc does not have that, he is put in jeopardy,” said my counsel.

“That's your problem.”

It was almost as though they were hoping I would fail. This was a peculiar attitude for them to take because the more successful the franchising, the more money they would make. My attorney gave up on the situation. I hired another and he quit, too, saying I was plain crazy to continue under such conditions. He could not protect me if the McDonalds should close in on me. So I said, “Let 'em try,” and I plunged ahead.

My home in Arlington Heights was right next to Rolling Green Country Club where I belonged and where I had a lot of business friends and golfing companions. Most of these locker-room acquaintances shared the general opinion that I had taken leave of my senses in getting into this fifteen-cent hamburger business. But I had one close friend who was quite interested in the venture. He had a son-in-law named Ed MacLuckie who was looking for a job and who had expressed a liking for the food service business. Ed was working a wholesale hardware territory over in Michigan at the time and it was not going well. So I talked to him. He was one of these whip-lean, nervous types who are often very fussy and fastidious and have great endurance. Just the kind of qualifications I was looking for, so I hired him as a manager of my first store. Art Bender, the McDonald brothers' manager, came to Des Plaines and helped Ed and me open that store on April 15, 1955. It was a hell of an ordeal, but the experience was to prove invaluable in opening other stores. Incidentally, Art Bender is still with us. He's a highly successful operator in California. So is Ed, who has stores in Michigan and Florida.

My notion about using that first unit as an experimental model was a good one. It took nearly a year to shake it down into a smooth-running operation although it made money from the start. I probably wouldn't have been able to get the thing started if it hadn't been for Jim Schindler of Leitner Equipment Company. He went out to San Bernardino and studied the layout of the griddles, fry vats, and so forth in the McDonald brothers' store. Then he adapted them to my plans in Des Plaines. One of the things I did differently was to make my milkshakes with a soft product drawn from a tank, instead of hand-dipping ice cream. This changed the layout and gave us more space. One major problem in adapting the California-style building to the Midwestern climate was ventilation. I brought in architectual consultants one after the other in an attempt to solve the problem of exhausting the stale air and replacing it with fresh cool or heated air. These guys could design a cathedral, but they didn't seem to be able to deal with my little hamburger store. It gets pretty cold in April in the Chicago area, so our furnace was put into action right away. The problem was that the fans for the griddle and fry vats would exhaust all the heat the furnace was putting out and continually blow out the pilot light. This could have allowed gas to accumulate dangerously. The temperature inside the store would hover around forty degrees. As the weather warmed up, the reverse happened, cool air was exhausted, allowing the inside temperature to climb up to around a hundred degrees.

A subject of much greater concern to me, however, was the great french-fry flop. I had explained to Ed MacLuckie with great pride the McDonald's secret for making french fries. I showed him how to peel the potatoes, leaving just a bit of the skin to add flavor. Then I cut them into shoestring strips and dumped them into a sink of cold water. The ritual captivated me. I rolled my sleeves to the elbows and, after scrubbing down in proper hospital fashion, I immersed my arms and gently stirred the potatoes until the water went white with starch. Then I rinsed them thoroughly and put them into a basket for deep frying in fresh oil. The result was a perfectly fine looking, golden brown potato that snuggled up against the palate with a taste like … well, like mush. I was aghast. What the hell could I have done wrong? I went back over the steps in my mind, trying to determine whether I had left something out. I hadn't. I had memorized the procedure when I watched the McDonald's operation in San Bernardino, and I had done it exactly the same way. I went through the whole thing once more. The result was the same—bland, mushy french fries. They were as good, actually, as the french fries you could buy at other places. But that was not what I wanted. They were not the wonderful french fries I had discovered in California. I got on the telephone and talked it over with the McDonald brothers. They couldn't figure it out either.

This was a tremendously frustrating situation. My whole idea depended on carrying out the McDonald's standard of taste and quality in hundreds of stores, and here I couldn't even do it in the first one!

I contacted the experts at the Potato & Onion Association and explained my problem to them. They were baffled too, at first, but then one of their laboratory men asked me to describe the McDonald's San Bernardino procedure step-by-step from the time they bought the potatoes from the grower up in Idaho. I detailed it all, and when I got to the point where they stored them in the shaded chicken-wire bins, he said, “That's it!” He went on to explain that when potatoes are dug, they are mostly water. They improve in taste as they dry out and the sugars change to starch. The McDonald brothers had, without knowing it, a natural curing process in their open bins, which allowed the desert breeze to blow over the potatoes.