Grinding It Out: The Making of McDonalds

Grinding It Out McDonalds Ray Kroc Cover

Grinding It Out: The Making of McDonald’s is a 1977 biography of Ray Kroc the self-proclaimed founder of what is now the internationally known fast food chain.

Before getting around to reading this book I had known very little about Ray Kroc, only that he was the owner of McDonald’s and the first time I ever read something about him, I believe was in the Rich Dad Poor Dad book where there was a text about him asking some business school students what type of business he was it; and while all the students though he was joking because surely it was the fast-food business, the correct answer is that he is in the real-estate one. I while I understood how that was I never really knew why. This book gave me the insight as to why that is plus other details that help you understand the McDonald’s success story much better.

One of the stories you will hear about Ray Kroc is that the started McDonald’s being 52 years old. If you hear that without any context you might think that be did very little to nothing or had a string of failures before hitting it big with McDonald’s. But the truth is that he was already a successful businessman even before meeting the McDonald’s brothers. Albeit not at the level at he was to become. And another important thing is that when he did meet them his initial intentions where not to work with them and get into the fast-food business but to sell more of the milkshake mixers he was a distributor for.

Reading Ray Kroc’s story from this book you get the sense that if it wasn’t McDonald’s he would have found some other business opportunity to grow because he was just that kind of a man. He would have found the solution one way of another.

each man makes his own happiness and is responsible for his own problems.

p. 5

Yet I was alert to other opportunities. […] “As long as you’re green you’re growing, as soon as you’re ripe you start to rot.”

p. 6

52 years old […] But I was convinced that the best was ahead of me. I was still green and growing

p. 13

Books bored me. I liked action. But I spent a lot of time thinking about things.

p. 15

They called me Danny Dreamer

p. 15

for me, work was play. I got as much pleasure out of it as I did from paying baseball.

p. 15

I learned that you could influence people with a smile and enthusiasm and sell them a sundae when what they’d come for was a cup of coffee.

p. 17

school […] It was simply too slow for me.

p. 17

He was regarded as a strange duck, because whenever we had time off and went out on the town to chase girls, he stayed in camp drawing pictures. His name as Walt Disney.

p. 19

No self-respecting pitcher throws the same way to every batter, and no self-respecting salesman makes the same pitch to every client.

p. 19

I was driven by ambition. I hated to be idle for a minute. I was determined to live well and have nice things.

p. 27

cash my check, putting most of it in savings

p. 27

I learned how to plan my work and work my plan.

p. 28

My philosophy was one of helping my customer

. . .

But my company was losing money on me by paying it, and I hated it.

p. 29

my first motto for McDonald’s – KISS – which mean “Keep it simple, stupid”

p. 35

He died of a cerebral hemorrhage in 1930. He had worried himself to death.

p. 42 referring to his father who incurred important losses during the market crash and depression of the 1930’s

“Look sharp and act sharp” I told them. “The first thing you have to sell is yourself. When you do that, it will be easy to sell paper cups.”

p. 50

There’s almost nothing you can’t accomplish if you set your mind to it.

p. 59

$100,000 in debt

. . .

this was the first phase of grinding it out – building my personal monument to capitalism

. . .

I refused to worry about more than one thing at a time, and I would not let useless fretting about a problem, not matter how important, keep me from sleeping.

. . .

I slept as hard as I worked.

p. 61-62

Mrs. June Martino

. . .

she had a presence that conveyed integrity and a restless native ability to deal with problems.

. . .

If she didn’t know something, she’d burrow into library books and find out.

. . .

they all called her “Mother Martino.” She kept track of everyone’s family fortunes, whose wife was having a baby, who was having marital difficulties, or whose birthday it was. She helped make the office a happy place.

p. 64-65

“You seem to be able to see further into the future than the rest of us”

p. 67 referring to what Al Doty, his accountant once said to him

the McDonald brother, Maurice and Richard

p. 70

I had a feeling that is would be one of those promotable names

p. 71

a man who represents himself has a fool for a lawyer

p. 71

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.

p. 77

Or maybe the lot would have some litter on it that Ed said he hadn’t had time to pick up. Those little things didn’t seem to bother some people, but they were gross affronts to me. […] But perfection is very difficult to achieve, and perfection was what I wanted in McDonald’s

p. 80

Harry Sonneborn.

. . .

Developing a franchise system and enforcing high standards would be difficult.

. . .

He immersed himself in stacks of books and learned the ins-and-outs of contracts and financial maneuvers as well as the lawyers and the bankers.

p. 83 In respect to Harry Sonneborn. I highlighted these part to remind myself how important it is to build up a team of smart people with the same goal as you

It’s thrilling to see your creation grow.

p. 83

my instinct helped us avoid the anti-trust problems some other franchise operations got into.

p.84

I’ve always dealt fairly in business, even when I believed someone was trying to take advantage of me. That’s one reason I have had to grind away incessantly to achieve success.

p. 85

Being in the restaurant development business

. . .

Franchise Realty Corporation

. . .

induce a property owner to lease us his land on a subordinated basis.

p. 87

I believe that if you hire a man to do a job, you ought to get out the way and let him do it. If you doubt his ability, you shouldn’t have hired him in the first place.

p. 88 again referring to Harry

Harry knew where he wanted to go, and he knew how to get there.

p. 89

1957, a year in which we opened twenty-five new McDonald’s

p. 94

our brain-wringing strategy conferences

p. 95

on the day the McDonald boys opened their new drive-in, it snowed three inches in San Bernardino!

p. 95

“feminine touch”

p. 96

Clashes were inevitable, though, because while Harry and I shared a belief in the capitalistic system and while we had the same faith in our enterprise and its future, our individual approaches were quite different.

Harry was the scholarly type. He analyzed situations on the basis of management theory and economic principles. I proceeded on the strength of my salesman’s instinct

. . .

much of the success of my organization has been a result of the kind of people I have picked for key positions.

p. 96

I once fired a member of our staff because he didn’t wear the right kind of hat and didn’t keep his shoes shined. […] but those weren’t the reasons I fired him. I just knew that he wasn’t right for us; he was prone to making mistakes, and the hat and the shoes were merely symptoms of his sloppy way of thinking.

p. 97

I like to get people fired up, fill them with zeal for McDonald’s, and watch the results in their work.

p. 98

Fred Turned

. . .

We were buying our buns in the midwest from Louis Kuchuris’ Mary Ann Bakery.

. . .

Fred pointed out that it would be much easier and faster for a griddle man if we had individual buns instead of clusters and if they were sliced all the way through.

. . .

These fractions of seconds added up to wasted minutes.

p. 99

Our stored were selling only nine items, and they were buying only thirty-five or forty items with which to make the nine.

p. 100

I was an overnight success all right, but thirty years is a long, long night.

p. 101

I always felt comfortable working with Fred Turner, because he is a detail man like I am. […] I work from the part to the whole

p. 101

he’d devised to show how these operations were doing. That list evolved into the format for our field consultations, which today is a vital part of our system-wide quality assurance.

p. 103 making sure that you got the same quality of service from each McDonald’s was an issue that they surpassed

The situation he forced us into is a good example of how adversity can strengthen you if you have the will to grind it out.

p. 106

My net worth in 1959 was about $90,000. This made it rather difficult to borrow money in the big amounts that Harry and I had in mind.

p. 107

I had yet to receive a single registered letter from them authorizing our buildings to be constructed with basements and furnaces.

p. 108

three insurance companies to lend us $1.5 million is exchange for about 22.5 percent of our stock.

. . .

That loan could be called the lift-off of McDonald’s rocket-like growth in the sixties.

p. 108-109

It was then that Harry’s view of the corporation as just a real estate business, rather than a hamburger business, began to crystalize.

p. 109

it’s vitality depends on the energy of many individual owner-operators.

p. 109

“In business for yourself, but not by yourself”

p. 110

Ray Kroc has made millionaire of more men than any other person in history. […] I’d rather say I gave a lot of men the opportunity to become millionaires.

. . .

It takes guts and staying power to make it […] it doesn’t require any unusual aptitude or intellect.

p. 111

The McDonald brothers were simply not on my wavelength at all. […] They were content with what they had; they didn’t want to be bothered with more risks and more demands.

p. 113

In our business there are two kinds of attitudes toward advertising and public relations. […] My own viewpoint is that of the promoted; I never hesitate to spend money is this area, because I can see it coming back to me with interest. Of course, it comes back in different forms […] Income for me can appear in other ways […] a nice smile on the face of a customer. That’s worth a lot, because it means that he’s coming back, and he’ll probably bring a friend.

p. 114 this bit also reminded me of John Paul DeJoria who often says you want to be in the repeat business

I have sorted through a competitor’s garbage to see how many boxes of meat he’d used the day before, how many packages of buns, and so forth.

p. 115

emphasize quality, service, cleanliness, and value, and the competition will wear itself out trying to keep up.

p. 115

My attitude was that competition can try to steal my plans and copy my style. But they can’t read my mind; so I’ll leave them a mile and a half behind.

p. 115

The thing that has made this country great is our free enterprise system.

p. 116

I knew this would be a difficult question for her to face, because both of us had grown up with a deep respect for religion and propriety, and we both had been brought up to believe in the sanctity of marriage.

p. 119 while mentioning Joni Smith who would late become his 3rd wife, but at that time both of them were married

the main reason I wanted to be done with the McDonalds was that their refusal to alter any terms of the agreement was a drag on our development.

p. 120

Harry found our money man in New York […] John Bristol

. . .

In return for $2.7 million in cash from Bristol’s group (who were called The Twelve Apostles in our records) we were to pay them .5 percent of the gross sales of all McDonald’s stores in three periods. In the first period we would pay .4 percent immediately and put aside .1 percent until the third period. The method of computing how much of the .4 percent immediately would go to interest was figured on the basis of 6 percent of $2.7 million; whatever remained would go toward retiring the principal. The first period would end when the principal was retired. The second period would be for a length of time equal to the first period, whatever that was. In the second period we would pay a straight .5 percent of our gross. The third period, then, would be the payment of the deferred .1 percent from the first period.

p. 122 interesting deal they struck there

The McDonald brothers retired happily […] Maurice died a few years later and Dick moved back to New Hampshire and married his childhood sweetheart, a pleasant person named Dorothy French, daughter of a Manchester banker.

p. 123

Luigi Salvaneschi […] His problem is that he is overeducated.

p. 124

One of the things Luigi had done in that Glen Ellyn McDonald’s was to teach what may have been the first formal operations lessons in our system. […] his crew was not greeting customers properly

. . .

holding classes for new operators and managers […] a training manual for operators

p. 125

My God, it was great to be green and growing!

p. 126

“I put the hamburger on the assembly line”

p. 128

even though our “development accounting” allowed us to show a profit, we had no cash flow.

p. 128

Gerry Newman

. . .

and couldn’t meet out payroll. Garry’s solution was to switch the pay period from weekly to bimonthly.

. . .

“Listen” I say […] “We’re going to be a billion-dollar company!”

. . .

Gerry had gone home and told his wife, Bobbi, that he had met me that night, and I had to be either a nut or a dreamer of both. […] Gerry was offered a job by another drive-in chain […] He turned it down. […] he said, “Because you don’t have a Ray Kroc.”

. . .

He has a strong memory that gives him total recall of situations.

p. 129-130

That was a big lesson for me in the effectiveness of television.

p. 139

Some people are bachelors by nature. I am not. I guess I needed to be married to feel complete. […] Her name was Jane Dobbins Green.

p.141 his second wife

in 1963 […] building 110 stores […] the following year we had a net income of $2.1 million on sales of $129.6 million

p. 142

Harry […] spend all his time studying how we could take the company public.

p. 142

we hadn’t been taking anything out, we were plowing it all back, so as not to slow down the company’s expansion.

p. 143

It was always been my belief that authority should be placed at the lowest possible level.

p. 143 talking about the overseeing of over 637 stores that were by now in operation

that’s the only way you can encourage strong people to grow in an organization. […] less is more in the case of corporate management

p. 143

The Hulaburger was two slices of cheese with a slice of grilled pineapple on a toasted bun. Delicious!

p. 146 it was the Filet-O-Fish or the Hulaburger

I was content with Jane. She was a fine lady, but it was Joni I loved and knew I always would.

p. 147 again referring to Joni which would become his third wife

We were about to go public, and that boiled down to what had to be the most traumatic ten days our company had ever experienced.

p. 148

we should go out at seventeen times earnings. […] I knew we were worth more […] He fought for twenty times earnings

p. 149

$22.50 a share […] Before the first month ended, it had climbed to $50 a share, and Harry, June, and I were wealthier than we’d ever dreamed possible.

p. 149

1966 […] $200 million in sales

p. 149

it was our strict adherence to moral principles in business that made us so strong.

p. 150

we decided to experiment with larger building and inside seating.

. . .

Our first store with inside searing opened in Huntsville, Alabama, in July 1966

p. 150

you lose a lot of friend on the way up.

It’s lonely on top.

I never felt this so keenly as when Harry Sonneborn and I had our final confrontation, and he resigned.

p. 152

Lubin’s advice was that I try to patch it up with Harry.

. . .

Harry agreed to stay, but it was an unhappy situation for both of us.

. . .

he was so certain the company would go down the chute when he left that he sold it all. […] Had he kept it, his stock would be worth over $100 million.

p. 154-155

“Hell’s bells, when times are bad is when you want to build!” […] “Why wait for things to pick up so everything will cost you more?” […] Pump some money and activity into a town, and they’ll remember you for it.

p. 155

15-Cent Hamburger is Now 18 Cents

. . .

Lyndon Johnson’s […] war in Vietnam, and even our increasingly sophisticated purchasing operations could not cope with inflation.

. . .

customer’s point of view – which is how I do it, because this guy is our real boss

. . .

Gerry had drawn up an economic curve showing a diminishing demand for our product for every cent of increase in price. Past experience led us to expect an initial surge in volume as regular customers came in and paid the higher prices. This would be followed by a sharp drop as customers went to competitors. Then there would be a steady rise as the competition raised their prices and customers came back to us. That’s exactly the pattern it followed.

p. 159

the Operators National Advertising Fund […] OPNAD is supported by a voluntary contribution of one percent of gross sales by licensees

p. 160

Paul Schrage’s […] a great deal of study had gone into creating the appearance and personality of Ronald McDonald, right down to the color and texture of his wig.

p. 160

By early 1968 I was ready to hand the baton to Fred Turner, and he took it without breaking stride.

p. 160

that was to ask June Martino to retire. […] But she was part of the old regime, and her approach would not longer work.

p. 161

When I went back to California […] I wanted to think about the business less – maybe eighteen hours a day instead of twenty-four

. . .

The western region operators scheduled their convention in San Diego […] Well, I thought, sitting in the sun could wait till another time. […] There was nothing more fun for me than rubbing elbows with a bunch of operators and talking shop.

p. 162

I hadn’t seen Joni for five years […] San Diego […] I din’t expect to be hit by the same wave of emotion that had bowled me over before.

My suite in the hotel had a grand piano and a fireplace and bar. […] my new Rolls-Royce

. . .

I had attained all I’d ever wanted in life expect one thing

. . .

I felt like a teenager on his first date.

. . .

I don’t know what I said that morning, but I was told many times afterward that it was the most inspiring talk I ever gave.

. . .

Jodi and I were married there, in front of the massive stone fireplace, on March 8, 1969.

At last I felt like a complete person.

p. 163-165

“Nothing recedes like success.Don’t let it happen to us or you”

p. 166

Jobs that one of us used to handle in a few minutes of spare time each week have grown into whole departments with hundreds of people on the staff.

p. 167

I believe that if you think small you stay small.

p. 171

cooperative advertising muscle. […] capitalism in action. Competition

p. 172

we are going to stay flexible and change as the market demands it.

p. 175

Hell, if I listened to the computers and did what they proposed with McDonald’s, I’d have a store with a row of vending machines in it. You’d push some buttons and out would come your Big Mac, shake, and fries, all prepared automatically.

p. 176 I found this passage funny since now-a-days that’s what McDonald’s is transitioning to

The value of our franchises has increased greatly over the year. […] $950 back in 1955. Ten year later […] was $81,500. These days it takes about $200,000.

p. 178

I wanted to own the Chicago Cubs, the baseball team I had been rooting for since I was seven years old.

. . .

I was thinking of buying the San Diego Padres

p. 181

I delegate authority.

p. 188

I’ve never done anything for the sake of money alone.

p. 189

The person who things only in terms of “Where’s mine?” can’t imagine anyone else not thinking the same way. […] we’re always trying to be good neighbors and responsible citizens.

p. 189

I could write another book about my mistakes. But it wouldn’t be very interesting. I’ve never seen negatives add up to a plus.

p. 190

I cut our losses and got out.

p. 190

Many young people emerge from college unprepared to hold down a steady job

p. 200

Nothing is the world can take the place of persistence. […] Persistence and determination alone are omnipotent.

p. 201

it is impossible to grant someone happiness. The best you can do, as the Declaration of Independence put it, is to give him the freedom to pursue happiness. Happiness is not a tangible thing, it’s a byproduct, a byproduct of achievement.

p. 204
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