Kroc, Raymond Albert ("Ray")
KROC, Raymond Albert ("Ray")
(b. 5 October 1902 in Oak Park, Illinois; d. 14 January 1984 in San Diego, California), flamboyant and legendary entrepreneur who, through pluck and luck, created McDonald's, the world's largest chain of fast-food restaurants and the most recognized brand name on the planet.
The 1960s were more than a golden age for the "Golden Arches"; they were also a decade of professional and personal triumph for McDonald's founder. The oldest of three children, Kroc grew up in a family of modest means. His father, Louis Kroc, was a midlevel executive with American District Telegraph, and his mother, Rose Mary (Hrach) Kroc, was a part-time piano teacher. Kroc's mother taught him how to perform, and his showmanship helped him become a master salesperson.
In 1917, at the end of his sophomore year, Kroc dropped out of Oak Park High School. Always one who preferred action to academics, he wanted to volunteer for military service in World War I. Too young to serve, he lied about his age and entered a Red Cross ambulance driver training program, but the war ended just before he was sent to France. After the armistice in 1918, he returned to Oak Park intent on completing high school, but after one frustrating semester he left school for good. Kroc took a position as a traveling salesperson for a ribbon novelty company, while playing piano on the side.
In the early 1920s Kroc sold paper cups for the Lily Tulip Company, beginning his career in the food industry. He worked for Lily on and off for nearly twenty years, becoming the company's Midwest sales manager. In 1941 he started his own business, the Prince Castle Multimixer Company. Manufacturing a mixer capable of making five milkshakes at once, the company prospered until the early 1950s, when the growing popularity of soft-ice-cream stands signaled the decline of the drugstore soda fountain and the classic malted milkshake.
One obscure restaurant, however, bucked the trend. In 1954 Kroc's Prince Castle Company repeatedly received calls from restaurant owners wanting to buy "a mixer like the one used at McDonald's" in San Bernardino, California. His curiosity piqued, Kroc did some checking and was astonished to learn that McDonald's restaurant had not one multimixer but eight. He had to know why the brothers Richard and Maurice ("Mac") McDonald, the owners of the restaurant, needed the capacity to make forty milk-shakes at once. Kroc went to San Bernardino and found the prototype of the fast-food restaurant of the future.
The McDonald brothers had developed a restaurant designed to attract the young families of the post–World War II era. There was a limited menu of assembly-line–produced foods sold in a self-service, squeaky-clean drive-in: no pay phones, carhops, vending machines, or other accoutrements that often turned a typical 1950s hamburger joint into a teenage hangout. Service was fast, the prices reasonable, the quality high, the surroundings spotless, and the food predictability consistent. Kroc encouraged the brothers to franchise their name and unique assembly-line system, but they lacked the ambition to take on such an effort. At the age of fifty-two Kroc offered to become their franchising agent.
Kroc and the McDonald brothers finally reached a formal agreement on 2 March 1955, and McDonald's Systems was incorporated. Just over a month later, on 15 April 1955, a model McDonald's Restaurant, complete with the trademark "Golden Arches," opened in Des Plaines, Illinois. (The store is still there today and operates as a museum.) The first day's receipts were $366.12, a handsome sum, considering that a hamburger sold for fifteen cents, fries for ten cents, a milkshake for twenty cents, and a cup of coffee for a nickel.
The Des Plaines site was a showcase store used to entice potential franchisees to buy a restaurant. Initially, growth was slow, in part because the agreement with the McDonald brothers required each franchisee to return 1.9 percent of gross sales to McDonald Systems, Inc. Of that total, 0.5 percent was paid to Dick and Mac McDonald, while the remaining 1.4 percent went to Kroc's company. While McDonald's was poised for growth, this was not enough to finance it, and the company lacked the capital to make growth happen. Enter Harry J. Sonneborn, a well-paid executive with a competing franchise, Tastee-Freeze, who in 1956 went to work for Kroc at a starting salary of $100 per week.
Attracted to McDonald's by its growth potential, Sonneborn created a leaseback system that quickly generated the money Kroc needed to expand McDonald's. The Sonneborn plan worked, and McDonald's, which had only thirty-one stores by the end of 1957, had 228 restaurants in operation by 1960. During this time, Kroc lived on his income from Prince Castle sales. In 1961, when he sold that company, he drew a salary from McDonald's Corporation.
In 1961 Kroc started the forerunner of Hamburger University, probably the one innovation that most helped McDonald's become an unqualified success in the crowded field of franchisers. The original agreement with the McDonald brothers required each new franchise operator to follow the McDonald's system religiously. This meant that every detail—store design, signage, menu, pricing—had to be duplicated without deviation. Hamburger University, later called McDonald's University in Elk Grove, Illinois, taught owners and managers the McDonald's system, ensuring the consistency needed for commercial success. No freelancing was allowed. As Kroc once said, "The organization can't trust the individual; the individual must always trust the organization." Kroc's dictum was less about autocracy and more about preventing the mistakes that harm a franchise's profitability. Many of McDonald's innovations, however, originated from individual operators.
In the early 1960s, for instance, a franchise in Cincinnati asked the corporation to develop a meatless menu item for Fridays, to satisfy the wants of practicing Catholics (who did not eat meat on Fridays) in the area. Kroc, who often was taken with the power of his own ideas, came up with the Hulaburger—two slices of cheese wrapped around a slice of grilled pineapple on a toasted bun. The sandwich was an instant flop, but the stores in Cincinnati solved the problem by creating the Filet-O-Fish, and the fish sandwich became a standard menu item at McDonald's. "Ronald McDonald," originally portrayed by Willard Scott, the television weatherman, began as "Donald McDonald" at a Washington, D.C., store in 1963 and became the company's spokesperson in 1966. Even the chain's most famous sandwich, the Big Mac, began as a novelty item at a store in Pittsburgh in the mid-1960s. The sandwich is not only McDonald's signature menu item; it also inspired one of the most memorable jingles in advertising history: "Twoallbeefpattiesspecialsaucelettucecheesepicklesonionsonasesameseedbun."
The relationship between the McDonald brothers and Kroc was always strained. The tensions began in 1955, when Kroc wanted to open the Des Plaines restaurant. It transpired that the brothers already had sold the franchise rights to northern Illinois, so before Kroc could build the Des Plaines restaurant in his own neighborhood, he had to buy back the rights. In 1961 Kroc, who wanted unfettered control of the McDonald's name and system, asked the brothers to name their price. They demanded what was then the astronomical sum of $2.7 million in cash—$1 million for Dick, $1 million for Mac, and $700,000 for Uncle Sam. In 1962 a reluctant Kroc agreed, only to discover that his ownership of McDonald's did not extend to the original restaurant in San Bernardino. Miffed at what he considered less than ethical behavior, Kroc exacted his revenge. In 1963 he opened a McDonald's restaurant virtually across the street from the original San Bernardino store, then called the Big M, because the brothers could not legally use the name McDonald's. Within a year, the Big M was out of business, and Kroc finally had complete control of McDonald's, the name, the system, and soon the empire.
Acquiring ownership of McDonald's was a huge career risk for Kroc, but it was financially rewarding. With Sonneborn as president and Kroc as chairperson of the board, McDonald's had more than 700 restaurants in forty-four states by 1965. The time was right for McDonald's to go public, which it did in April of that year. Within days Kroc became a multimillionaire, and at the time of his death, Kroc's personal fortune was estimated at $500 million. Taking McDonald's public was the most significant accomplishment of Kroc's business career.
Kroc was married three times. His first marriage was to Ethel Fleming in 1922; they had one daughter and divorced in 1961. In 1957 Kroc met Joan ("Joni") Smith, an electric organist at a nightclub in Saint Paul, Minnesota. Kroc proposed that Smith and he get divorces so that they could marry each other. Initially, Smith agreed, but she later had second thoughts and changed her mind. Kroc was crushed. In 1962 Kroc moved to California to revitalize McDonald's West Coast business, where imitators had slowed growth to a trickle. He met Jane Dobbins Green, a secretary to John Wayne, and after a whirlwind fourteen-day courtship, the two were married. Seven years later, while he was at a McDonald's convention in San Diego, Kroc again met Joni Smith, who was attending the convention with her husband, a McDonald's manager. The spark that had attracted Kroc and Smith to each other burned as intensely as ever, and they again agreed to divorce their mates and marry. This time they followed through with their plan. They married on 8 March 1969 and remained together until Ray's death nearly fifteen years later.
By the end of the 1960s McDonald's had more than two thousand stores and was still growing rapidly. Kroc was out of his element in the rarefied corporate atmosphere that the company now occupied. He was an entrepreneur, not a manager. He thrived on the smell of the greasepaint and the roar of the crowd, not the proverbial bottom line. Within a few short years his role as strategist morphed into that of corporate cheerleader. He and his wife turned their interests elsewhere, purchasing the San Diego Padres professional baseball team in 1974. In 1976 they also established the Kroc Foundation, which supports medical research in diabetes (from which Kroc himself suffered), arthritis, and multiple sclerosis. The Kroc family is also a major benefactor for many nonprofit organizations in the Chicago area, such as the Children's Memorial Hospital, the Lincoln Park Zoo, and the Harvard Congregational Church in Oak Park.
Kroc died of a heart attack at the age of eighty-one. He is interred at the El Camino Memorial Park in La Jolla, California. At the time of Kroc's death in 1984, McDonald's annual sales exceeded $8 billion. At a memorial service for Kroc on 20 January 1984, Fred Turner, president of McDonald's from 1967 to 1977, said of his longtime friend: "Ray touched us.… He was positive, not negative. He was a giver, not a taker. He was the best boss in the world, a best friend, a second father, a perfect partner, and an inspiration."
Kroc's autobiography, written with Robert Anderson, is Grinding It Out: The Making of McDonald's (1977). Biographical information is also in Max Boas and Steve Chain, Big Mac: The Unauthorized Story of McDonald's (1976); Janice Claire Simpson, Ray Kroc: Big Mac Man (1978); and John F. Love, McDonald's: Behind the Arches (1986). The McDonald's Web site has executive biographies and historical photographs tracing the history of the company at http://www.mcdonalds.com/corporate/info/history/.There are several videos available about Kroc and McDonald's, including Biography: Ray Kroc, Fast Food McMillionaire (1998). Obituaries are in the Chicago Tribune and the New York Times (both 15 Jan. 1984).