Raymond Albert “Ray” Kroc (October 5, 1902 – January 14, 1984) was an American businessman who 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.
Born in Oak Park, near Chicago, to parents of Czech origin. During the First World War he lied about his age and became a Red Cross ambulance 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 became frustrated with the brothers’ desires and in 1961 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.
The McDonald brothers 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. 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.
Words of Wisdom
It is no achievement to walk a tightrope laid flat on the floor. Where there is no risk, there can be no pride in achievement — and, consequently, no happiness.