McDonald's is a real estate company because its model is to buy properties and lease them to franchisees for rent.
Where does this model come from, we must start with the history of McDonald's business. This "The Founder" reveals to us the secret of McDonald's, how it became a restaurant empire step by step, including dreams, difficulties, and treacherousness.
After reading the following, you will learn:
- How do people with no catering experience create McDonald's?
- How important are dreams, knowledge, and vision to entrepreneurs?
- Why is McDonald's a real estate company?
- What are the implications of the McDonald's story for ordinary entrepreneurs?
- If the original founder is kicked out after success, how complicated is the mall?
How does McDonald's subvert traditional fast food?
In the 1950s, drive-thru fast food restaurants were very popular in the United States. Drive in a place where the car is convenient to park, the customer does not need to get out of the car, and the waiter will deliver the meal to the car.
However, the speed of delivery is unbearable, and you may not be able to eat after waiting for 20 minutes. It may also be delivered by mistake. If you ask for a roast beef burger, it may turn into roast chicken, and the burger is also unpalatable.
Anyway, most of the customers will only come once, just like a tourist attraction.
Fortunately, the waiters are all flaming red lips, willow slender waists, tempting uniforms... They are very sexy, and everyone has put up with it.
But the McDonald brothers couldn't bear it, because the performance was stagnant.
The brothers believe there is something wrong with the drive-in restaurant model. First, this model attracts less-than-ideal customers—problem teenagers, punks, hooligans, juvenile delinquents. Secondly, it takes too long to deliver meals to customers, and it also needs to pay high wages for employees.
They also found that 87 percent of restaurant sales came from burgers, fries and soft drinks.
So the two brothers made a decision to focus on products that can really sell, reducing the original 27 dishes to three. We also cut down the food delivery staff and let customers go to the window to pick up their meals. All of them are packaged in disposable paper and thrown away after eating, saving the cost of recycling tableware, establishing a family-oriented dining environment, and targeting new customer groups.
What's more, McDonald's has created a fast food delivery system, which can make a hamburger in just 30 seconds, which greatly saves the waiting time for meals, and each hamburger and french fries are produced in a standardized way to ensure the same taste.
When they decided to shut down some other profitable businesses, others thought they were crazy and let go of the profitable business.
Indeed, it was an absolute innovation at the time, it was crazy. McDonald's initially opened a few franchise stores, but the franchise stores returned to the original mode when they were doing it. The kitchen was dirty and the quality could not be guaranteed, and more dishes were added. It can be seen how much the catering people looked down on the McDonald's model at that time.
The reform of McDonald's means that the entire production process has changed. How can we ensure the normal operation of the new process without errors? The McDonald brothers took all the employees to the tennis court, drew a floor plan of the kitchen, and let everyone stand on it to simulate the operation and production process. After changing the kitchen layout three times, 6 hours of simulation, after arranging everything. The brothers officially set up the kitchen and started a new production mode.
This is worth learning by entrepreneurs. Don’t invest money to do it as soon as you come up, simulate the operation first, the cost is low, and the time is less, and you can start to do it when it is confirmed that it is feasible.
At the beginning, everyone was not used to it and complained that there was no waiter and sister to order food in front of the window. Later, the two brothers made publicity, but it was still useless, and everyone did not buy it. Just as they were discussing whether to change back to the original mode, a little boy took the initiative to walk to the window to ask for a burger, and then people driving by took the initiative to get out of the car to buy a burger, and then everyone took the initiative to queue up to buy it.
If you can learn the methods of the Chinese people at this time and find a support to line up, you may be able to become popular faster.
Of course, this is not a change brought about by a little boy queuing up, but a qualitative change caused by a quantitative change by accumulating consumers' cognition little by little by relying on the quality and speed of McDonald's meals. So, if one day the number of people in your store increases inexplicably, it is not luck, but your product is really attractive.
A layman peddling a big dream
The McDonald brothers made McDonald's fire, but it was another man who really made McDonald's great - Ray Kroc.
Ray was in his 50s before joining McDonald's, but he was a complete Loser. He has sold paper cups, folders, milkshake mixers, etc., and personally drove the car all over the country to promote it, but every time he failed, the merchants just didn't buy what he thought was very useful.
Once, he found out that McDonald's ordered him six milkshake mixers at one time. He was very curious and drove himself to see what the store manager was like. He was stunned by the scene in front of him. He couldn't imagine how fast the meal could be served. The customer sat in front of him and ate burgers beautifully, as if love had come again.
Later, the McDonald brothers showed him the entire production process. After understanding the logic behind it, Lei immediately judged that this is an innovative catering model. If he wants to join, he wants franchise rights.
The two brothers said: No, we have opened the franchise, it is difficult to control the quality, the franchise store is too bad, so it is impossible to scale in this way. So Ray refused.
But Ray, who is knowledgeable (too poor and divorced), did not give up. He went to see a McDonald's store in Phoenix, and the Golden Arch was deeply moved by him. After returning, he persuaded the two brothers with a dream.
Next, Ray started his own show.
"I've driven to a lot of small towns, and generally they have two things, a courthouse and a church. There's a cross on the top of the church, and a flag on the top of the courthouse. As I pass by, I keep thinking about the development of this restaurant, these arches and these buildings. There is a lot in common, the cross at the top of the building is where people focus, they share the protection of the American flag. It can be said that those buildings surrounded by beautiful arches, more or less represent the same thing. McDonald's not only It's just the hamburger food, it's family, it's community, it's where Americans come together and eat bread. And McDonald's is going to be a new generation of America's church."
In order to ensure that the franchise stores can have the same quality, the two brothers set very strict terms in the contract. The desperate Lei agreed, but this has laid a hidden danger for future development.
Lei has no experience in the catering industry, so why would he dare to do this?
In fact, what Lei does is not catering, but his old business - agency sales.
At first, Ray was an agent selling paper cups, and he found that a store had ordered a lot of paper cups from him because their milkshakes were selling well. And the biggest contributor to this is the five-axis milkshake mixer. Lei saw a business opportunity from it, so he went to represent the milkshake mixer. Unfortunately, the machine did not sell well, leaving Ray very poor.
But these work experiences allowed Lei to develop a very powerful sales ability. At the beginning of the film, it is Lei's sales speech "which came first, the chicken or the egg", showing his powerful eloquence. Convincing the McDonald brothers also relies on this ability.
After obtaining the franchise, Ray did not open his own store, but recruited franchisees. It used to sell mixers, but now it sells entrepreneurial projects, and all that is needed is the ability to sell (flicker) .
So, Ray was still doing what he was capable of.
In fact, Lei only opened one store, and he secretly mortgaged the house and opened it without his wife's knowledge. This also requires great courage, success is success, failure will be nothing.
The solution to quality control starts from the screening of franchisees
At the beginning, Lei found rich people to invest and set up shop, telling them to make sure no losses.
He went to a club with his wife, and when Ray revealed a new project, everyone laughed at him, and the scene was awkward at one point.
Ray: This time it's a new type of restaurant.
Jack: How new? A restaurant full of milkshakes and folders?
Hahaha......
That's when Ray's wife came out to solve the problem: Wait a minute Jack, you should listen to him, this time is different.
Behind a successful man, there is an excellent woman. When her man is complained about outside, he does not despise him for his incompetence, but stands on the same front to help him speak.
The wealthy also invested and opened a few stores, but as they worked, they returned to the old old model, with many dishes and slow delivery...
To this end, Ray turned against these rich people and terminated the contract.
Is it really like what the McDonald brothers said, you can't control quality when you do it on a large scale?
Once, a Jewish brother came to Ray's company to sell the Bible, and Ray asked him: Why are you a Jew selling the Bible?
The brother returned to him: to live.
This sentence awakened Ray. Rich people don't care about this little money, they don't manage with heart, only those who are running for a living will manage with heart. So he targeted the franchisees at this type of people. The couple started their own business and took care of each other.
Sure enough, it worked well. The franchisees are conscientious and do it in full accordance with the requirements of the headquarters.
711 later adopted this strategy, and their criteria for selecting franchisees were those who started businesses for a living, rather than those who started businesses for the sake of investing and making money.
Competing for the position of founder, showing the sinister market
The early success did not allow Lei to make any money, because the cost was too high.
Milkshakes use fresh milk and must have a refrigerator, which is very expensive.
Lei learned from a friend that there is a milkshake powder that tastes no worse than the freshly made powder. If you use it, the cost can be reduced a lot. After trying it out for himself, Ray decided to promote it at McDonald's. Since the previous contract stated that any changes in the store must be approved by the McDonald's brothers, Ray asked the McDonald's brothers to switch to milkshake powder, but was refused.
The brothers have always been conservative, they thought they had to guarantee a high enough quality to do it like a craftsman. This concept is correct, and later McDonald's changed back to milk after using milkshake powder. But at that stage, in order to expand rapidly, it may be necessary to reduce some quality.
At one point, Ray's company, after calculating all of its expenses and income, found that there were only a few dozen dollars left in the account, and it was immediately facing bankruptcy. He also asked the two brothers if they could lower the licensing fee so that he could expand rapidly, but the two brothers rejected him again.
In desperation, Lei went to the bank for a loan without collateral, which was also rejected. But at the bank, Ray met a man who was the second man to make McDonald's great: Harry Sonneborn.
Harry told Ray that there was something very wrong with the way he expanded. He should buy the real estate and then rent it out to franchisees, so that he can earn rent and control the franchisees, and his income is much more than 1.4% of the profit.
So Ray and Harry started the plan together, set up a separate real estate company to operate, and McDonald's also has enough funds to quickly open a store.
When the McDonald brothers found out, it was too late. Ray has taken control of all the franchisees, and he has not broken his contract with the brothers. After that, Ray sold milkshake powder in other stores, and the two brothers couldn't do anything about him. Because even if they were to sue Ray, they couldn't afford the legal fees, Ray is the CEO of a big company, a national brand, and the McDonald's brothers are just a small shop.
The two brothers also insisted that the company mainly relies on them to contribute, and that the quick meal system was developed by the two brothers, and Lei did nothing. That's when Ray told the truth.
He said: "He contributed a concept, a winning concept. When you choose to back down and become losers, you are doomed to fail. The mall is like a battlefield, dog bites dog, man eats man, there is no room for cowards in the battlefield, if my competitor falls into the water, I will walk over and put a water pipe in their mouth.
It's cruel, but it's also true.
Later, the McDonald brothers agreed to sell McDonald's to Ray for $2.7 million + 1% of the company's profits. Ray agreed, but when signing the contract, Ray said that it could not be written in the contract, it could only be an oral agreement. After getting the brand, Lei changed himself into the founder of McDonald's, and the first store he opened was McDonald's No. 1 store.
Later, the brothers did not receive a cent of royalties other than $2.7 million, and the brothers could not prove the agreement. McDonald's now earns more than $100 million in annual royalties. A few years later, the two brothers' restaurant went bankrupt.
This is the case in shopping malls. Oral agreements have no legal effect and are only feasible if they fall into writing.
Everyone knows McDonald's today, a world-class fast food giant, but he is also one of the largest real estate companies in the world.
So looking back, who actually founded McDonald's? Is it the McDonald brothers or Ray Kroc.
I think it was McDonald's who founded the McDonald's fast food restaurant, but it was Ray Kroc who made McDonald's a brand and a symbol of the world.
Why is Rayneng successful? He concluded by himself - persevere.
View more about The Founder reviews
