Selfish to be Successful

Modern-day society espouses and holds many qualities in high esteem. The presence or absence of these qualities denotes the standing of an individual in said society.

We pride ourselves in holding these qualities in high esteem and are often of the belief that it is this subscription to the idea of a set of "good" qualities that makes us successful.

Chances are, you, the reader knows what these qualities are to some extent. It's difficult to list all of them but if we list the opposites of the biblical seven deadly sins, we can get a rough idea of what they are.

                                         Seven Deadly Sins        Seven Heavenly Virtues      

                                                                Lust          Chastity

                                                               Envy          Gratitude

                                                             Greed          Generosity  

                                                             Wrath           Patience

                                                              Pride           Humility

                                                              Sloth           Diligence

                                                         Gluttony           Temperance  

   

And indeed, on a cursory observation, we can conclude that there is nothing wrong with this policy. However, some examination of more practical events and scenarios brings out certain fallacies regarding this idea.

Here's an interesting fact for you: In the continental United States, the farthest McDonald's from any point is 120 miles(193 Kilometres for metric users). This fact is all the more impressive when you consider that the United States covers 3.8 million square miles of the earth. There are about 13,500 McDonald's stores operating in the U.S as of right now, and it's currently the largest fast-food chain in the world.

It certainly begs the question, how? I found a possible answer through a movie called The Founder. 

It was a chance occurrence, I wasn't particularly intent on getting any work done that day so, like so many other days, I decided on switching channels aimlessly in search of something interesting to watch. After looking for a while, I eventually settled on The Founder, purely because the other options were lacklustre, and I figured it certainly couldn't hurt to try a new movie.

"The Founder" describes the story of Ray Kroc, the founder(see what I did there?) of the McDonald's Corporation. It was a particularly interesting watch, and I did some digging up regarding its source material.

Now you might be wondering, where did the name McDonald's come from then? Ah, I'm glad you asked! To explain that, I must indeed explain how McDonald's came to be.

Raymond Albert Kroc was born to Czech-American parents in Illinois, Chicago. He was always a bit of an opportunist. At fifteen years old, he lied about his age to work as a Red Cross ambulance driver during World War I. Unfortunately for him, the war ended before he could get his training completed.

Ray would eventually get a job as a milkshake mixer salesman and travelled across the country selling his wares, selling the odd Multi-mixer here and there at a few mom and pop restaurants.

One day Ray gets a call from a small restaurant way out in San Bernadino, California. A little restaurant called McDonald's. They decide to place an order with him for some multi-mixers... eight of them.

Ray couldn't believe what he was hearing. It was 1954, the hospitality industry was still reeling from the second world war and here was a tiny restaurant doing such good business that they needed eight multi-mixers?

He had to see this for himself, and he travelled to the location. The sight he saw there astonished him even further but to get an understanding of exactly why he found the restaurant incredible, you'll have to understand the landscape of "eating out" in America at the time.

Most restaurants were run by families and would serve numerous items, varied in culture and type. There were specified parts of the restaurant where you could be seated and eat, much like most sit-in restaurants of today. This format hasn't changed as significantly as the format for drive-in restaurants.

Dick and Mac McDonald, two brothers owned a drive-in restaurant themselves.

The concept of drive-in restaurants was simple, you want a quick meal, cheap and delicious. You'd drive to the restaurant and park in the parking lot and wait for a carhop(a person who comes to your car to take your order and later serve it), and choose from a large number of options. The food would be served on conventional utensils(silverware and such) which would be returned to the restaurant after the meal. You'd leave satisfied...except not always.

The McDonald's brothers found some major flaws in this entire system: this system of not having to come to sit down and have a meal tended to attract a different clientele than what the restauranteurs wanted- teenagers. Teenagers were usually loud, obnoxious and would litter the premises. To add to this misfortune, they would often try to harass and grope the carhops who were usually women. Then there were matters with serving in silverware, often people wouldn't bother returning it, or if they did return it, it would be in a pathetic state. The large menu necessitated larger inventories and staff equipped to make the items all of which would drive up the costs of operation. There was also no uniformity in the process, so the taste of several items would be different on different days.

The most significant issue with this system, however, was the wait. The wait could be anywhere from five to thirty minutes. By the time your order got to you, it was probably not even what you ordered in the first place and would be cold. This was due to the huge menus, which necessitated different cooking processes and an inefficient layout of the restaurant kitchen.

And yet, the brothers had no real reason to change; they were still doing well enough with their conventional drive-in to make a living and trying to do something different was asking for trouble. They decided to make some changes.

They started to try and find solutions to the problems they already had and on new ways to increase their margin of profit.

The teenagers would have to be replaced by a more suitable demographic, families. Families were generally more ordered, expected to follow basic etiquette and civil. So they'd be the ideal consumer for the restaurant. Jukeboxes and ashtrays were removed, to give the impression of a family establishment.

Carhops are unnecessary; after all, the customer could just as easily walk up to the counter and order. 

Silverware was replaced with paper packaging, which was cheaper and could be thrown out after it was used, making it less cumbersome in comparison to silverware.

They also noticed that the majority of their orders were of hamburgers, fries and soft drinks, so they decided to do away with their large menu. This change gave the cooks much more breathing room to work.

They also decided to give them some actual room by making the kitchen layout more efficient and spacious.

Ingredients and inventory usage was more precise, giving the final product much more uniformity. Staff were now not expected to multi-task but rather excel at one job, whether it was working the register or grilling the burgers.

These changes also had a cumulative effect on their biggest problem, the wait.

The wait came down from 30 minutes to 30 seconds, a feat unimaginable for most drive-ins of the time. The reason for this was the new system. By the time customer had finished ordering, most of his order was already done cooking.

This system was christened the Speedee Service System and was the original fast food system.

One would think that with all of these improvements, the restaurant became an immediate success. Instead, they were greeted by irritated and confused customers. 

The customers would start honking their horns when no carhop came up to their cars to take their order, the lack of silverware was an even more jarring change. Business slowed down and it seemed, destined to be a failure-until it wasn't.

People are slow to change, but they are not indifferent to it. Soon people in San Bernardino county couldn't get enough of the restaurant. Lines were long but moved fast because of the Speedee system and the brothers found themselves needing more inventory than ever before.

It was in this situation that Ray Kroc entered their lives. Ray was amazed by this restaurant and especially by its waiting times. There was no compromise on taste either, and the food was reasonable in price as well. It all seemed too good to be true.

Even after returning home, Ray couldn't get the restaurant out of his head. 

He saw an opportunity, and he was going to take it.

He returned to San Bernardino and requested to talk with the McDonald brothers. He offered to be their franchising agent, taking a measly cut in return for expanding McDonald's across America. The brothers were hesitant, their previous attempts at expansion had failed,because the franchisees would often sacrifice quality for a bigger profit and they didn't have much reason to think something new would happen this time.

This was where one of Ray's most important qualities shone through, his persistence. He kept on lobbying the brothers with dogged determination like a man possessed until, finally tired of his pitches, they decided to take another shot at franchising with him. To ensure that their quality standards were maintained, they drew up a stringent contract with Ray. One which kept him on a leash and gave them the power to veto the decisions any decisions made.

Ray happily signed the papers. The way he saw it, no price was too great for the American dream. He wanted McDonald's to become a household name and he was excited to get started on this ambitious endeavour.

And yet as he soon found out, it was going to be an uphill battle. The McDonald's brothers prophesies of doom started to come true, the budding franchisees(who were usually wealthy), while initially in line with the company's standard for quality, soon started to cut corners to widen their profit margin. This would inevitably cause the quality of the food to fall and people would stop coming to the restaurants in the first place, leading to the restaurants closing down.

Ray wasn't like the previous franchising agents however and he came up with the extremely simple, yet groundbreaking idea of only allowing middle-class franchisees. These franchisees had more to lose, therefore they'd do their very best to keep the business healthy and they'd stick to the guidelines and maintain quality.

The years passed, McDonald's started booming, branches popped up everywhere. However, Ray started to realise the follies of his contract with the brothers. He couldn't make any considerable changes without the brothers' approval, and the brothers approved few things at all to begin with, as they were adamant on keeping the quality consistent, despite the possible profits to be made by adjusting certain things, no matter how small they seemed. They were often resistant to change and this irritated Ray to no end.

On top of all of this, the cut of the profits(around 1.4%) that Ray made was too small to sustain himself. He had mortgaged his house and his relationship with his wife Ethel was getting more and more strained by the day due to his workaholic nature.

At this time, much like an angel descending from the heavens to appease the miserable, Harry J. Sonneborn arrived in Ray's life. The two had a chance meeting and when Sonneborn heard of Ray's conundrum, he saw a way out that few could have possibly seen. Real Estate.

Sonneborn reasoned that Ray's real profits lay in buying up plots of land and leasing them to franchisees. A stipulation in the franchisee contract would be drawn up that the franchisee could only lease land from Ray and therefore he'd have two streams of income from a franchisee, the profits of operation and the monthly lease. Additionally, this would allow him to be more stringent with the franchisees, if they failed to uphold quality and service, their lease would be cancelled effectively running them out of business and Ray could now control the franchisees without needing approval from the McDonald brothers.

Ray started bringing in sweeping changes with Sonneborn at his side, ingredients were tweaked, building layouts, accessibility got a more profit oriented revamp, and these changes drove the profit up. The McDonald brothers were horrified, their vision of McDonald's was being twisted beyond recognition and despite their pleas to Ray, he soldiered on.

Eventually, he grew powerful enough to finally do what he wanted to do the most, buy the company from the brothers. The brothers were hesitant. They didn't want to part from their creation at first, but they soon realised that this change was inevitable. Eventually, they sold McDonald's to Ray for 2.7 million dollars(A million for each brother after-tax) and a 1% annual royalty fee. It is alleged that the annual royalty fee was based on a handshake deal and that Ray never fulfilled his promise to the brothers, however, the only source for this is from one of the nephews of the brothers. The brothers also wanted to keep ownership of their original San Bernardino store, a part of the contract that Ray very reluctantly agreed to. (They later renamed this branch to "The Big M" as the name McDonald's was now owned by the McDonald's Corporation. A McDonald's branch was set up close to this original store and it soon ran "The Big M" out of business).

The rest, as they say, is history. Ray's intelligent and profitable decisions created one of the most successful multi-billion companies the world has ever seen. It now spans across the entire globe and there are few who have never heard of the chain. He died in 1984,very wealthy with a worth of 600 million dollars(even more in today's money because of inflation) and is now known as the Founder of McDonald's Corporation.

It would be easy to state that Ray destroyed a beautiful idea, that he was greedy for wanting more out of it and that, he conned the brothers out of hundreds of millions, but a more pragmatic view sheds light on many of his actions. Ray made several changes to many ingredients, making McDonald's more profitable, but they weren't necessarily terrible changes. He believed in the motto, "Quality, Service, Cleanliness and Value", and did much to keep it that way. He was a stickler for the original dream that the brothers had and yet made changes to it such that it was much more profitable and marketable.

The brothers created the original Speedee system and effectively invented fast food. They were pioneers, men who dared to go against the grain. Yet, if the McDonald's brothers created the system Ray was the one who brought it to the entirety of America and later to the entire world by way of McDonald's.

McDonald's is an icon of Americana, which is ironic considering that the brothers were Irish in origin and Kroc himself was born to Czech-American parents. Yet, I would argue that if they led McDonald's, if they never met Ray, it would have never been as successful as it is today. Its golden arches are more recognisable than the Christian Cross

Ray wasn't a man without fault, of course, he tried to make this idea his own, and tried to make it seem like he was the true founder of McDonald's when that wasn't the case, and yet I would say that he wasn't evil. He didn't steal; whatever he took, he made it his own by bringing in massive changes which would make it more efficient and profitable.

It brings me back to the original idea, the McDonald's brothers were humble, hardworking and faithful and yet they lost. Ray Kroc, who could be seen as greedy and arrogant, won in the end. How could this be? The righteous win, do they not? And don't the evil get their comeuppance? 

The McDonald's brothers were too trusting, they revealed their entire system(worth billions) to anyone who asked, they were transparent, kind and welcoming, and this showed their complete ineptitude in business, probably because they were never trying to be businessmen. One of Kevin O'Leary's most famous quotes is, "Business is war" and in the case of the McDonald's brothers, it rings truer than ever.

Ray was a ruthless businessman. He wasn't soft, and when he eventually divorced his wife Ethel, he even remarked that she could take all of his assets, including his home but that he wouldn't part with a single share of McDonald's. It shows his utter belief and dedication to McDonald's, rivaling even that of the McDonald brothers, perhaps even more. He was hard working and did as much pioneering as the McDonald's brothers did, except in business. The McDonald's brothers were comparatively conservative and close-minded to expansion, whereas Ray always wanted to grow the company. Without Ray's greed to grow, without his pride in the idea of McDonald's, it wouldn't exist at all.

Many are critical of Ray and even "The Founder" portrays him negatively. For some strange reason after all the reading and watching I've done about him though, I see him as the quintessential businessman, unbridled by ideals and yet following them when they forwarded his cause. He was as much of a founder of McDonald's as it is now as Dick and Mac 

Mcdonald are(I don't agree with him wanting to name himself as the only founder, but I can understand why he would do such a thing).

Mac Mcdonald eventually died in 1971 in a diabetic coma. Dick McDonald died in 1998. Dick was never resentful of Ray despite all that he did. Perhaps even Dick saw that Ray had a significant role in creating McDonald's as it is today. In interviews, he never spoke ill of Ray; and he never expressed regret on signing the deal.

Ray Kroc has become an example of the realisation of the American dream. I would say that there is much to learn from his life as there is from the lives of the brothers. From all there is to be learnt here, the one thing that I could say that stuck with me the most was that success is not born out of goodwill; it is born out of persistence, cunning and indeed selfishness.