Grinding It Out (11 page)

With the help of the potato people, I devised a curing system of my own. I had the potatoes stored in the basement so the older ones would always be next in line for the kitchen. I also put a big electric fan down there and gave the spuds a continuous blast of air, which greatly amused Ed MacLuckie.

“We have the world's most pampered potatoes,” he said. “I almost feel guilty about cooking them.”

“That's all right, Ed. we're gonna treat 'em even better. We're gonna fry 'em twice,” I told him. I explained the blanching process the potato people had recommended we try. We gave each basket of fries a preliminary dip in the hot oil and let them drip dry and cool off before cooking them all the way through. Finally, about three months after we'd opened the store, we had potatoes that measured up to my expectations. They were, if anything, a little better than those tasty morsels I'd discovered in San Bernardino. We worked it out so the blanching was done on a regular production-line basis. We'd take two baskets at a time and blanch them for three minutes. They would be a rather unappealing gray color when they came out at that point, but the cooling and draining would allow some oil to penetrate into the body of the potato. The chemistry of this tinge of oil in the starch of the morsel when it was dumped back to fry for another full minute created a marvelous taste. They'd emerge for the second time golden, glowing, and appealing. We would dump them into a stainless steel drain pan under a few heat lamps and let the grease drain off. Then they would be placed, with sugar tongs, two or three strips at a time, into the serving bag. That process wouldn't work today. It would be far too costly in labor. Even then a lot of people marveled that we could sell those potatoes for a dime.

One of my suppliers told me, “Ray, you know you aren't in the hamburger business at all. You're in the french-fry business. I don't know how the livin' hell you do it, but you've got the best french fries in town, and that's what's selling folks on your place.”

“You know, I think you're right,” I replied. “But, you son of a bitch, don't you dare tell anyone about it!”

I was elated when I finally got that store open and it began to show a profit. I recognized that it was not in the best of all possible locations; at most it was a mediocre site for a place that had no prior public exposure. Yet it was doing well, and I was able to move ahead and start lining up my franchisees for other locations. The first place I looked for them was the locker room at Rolling Green, and many of my golfing friends became very successful McDonald's operators.

Then the whole deal ground to a halt on another piece of dramatic deviousness or dumbness, I don't really know which, on the part of the McDonald brothers.

I had been made aware of the ten other sites in California and Arizona that the brothers had lent their names to, and we'd agreed that was fine. I was to have all the rest of the United States. But there was one other agreement they hadn't told me about, and that was for Cook County, Illinois, where I had my home, my office, and my first model store. The brothers had sold Cook County to the Frejlack Ice Cream Company interest for $5,000!

It cost me $25,000 to buy that area from the Frejlacks, and it was blood money. I could not afford it. I was already in debt for all I was worth.

I couldn't blame the Frejlacks, of course, they were completely aboveboard and fair. But I could never forgive the McDonalds. Unwittingly or not, they had made an ass of me—in the Biblical sense. I'd been blindfolded by their assurances and led to grind like blind Samson in the prison house.

My only salvation was the goodwill I'd built up over the years in Prince Castle Sales. The income from Multimixer paid the rent and all salaries while I was slaving away to get McDonald's started. I would drive down to Des Plaines each morning and help get the place ready to open. The janitor would arrive at the same time I did, and if there was nothing else to be done, I'd help him. I've never been too proud to grab a mop and clean up the restrooms, even if I happened to be wearing a good suit. But usually there were a lot of details to be taken care of in terms of ordering supplies and keeping the food operation going, so I would write out detailed instructions for Ed MacLuckie concerning them. Ed came in about 10 o'clock in the morning to open the store at 11 o'clock. I would leave my car at the store and walk the three or four blocks to the Northwestern station, where I'd catch the 7:57 express to Chicago and be in my Prince Castle office before 9 o'clock.

June Martino was usually there ahead of me and had the day's business started with our East Coast reps. I had manufacturers' representatives all over the country to handle Multimixer sales. For a time I kept some of the big customers, such as Howard Johnson's, Dairy Queen, and Tastee Freeze, as my personal accounts. I relinquished these gradually as McDonald's business demanded more and more of my attention. In the evenings, I would commute back to Des Plaines and walk over to the store. I was always eager to see it come into view, my McDonald's! But sometimes the sight pleased me a lot less than other times. Sometimes Ed MacLuckie would have forgotten to turn the sign on when dusk began to fall, and that made me furious. 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. I'd get screaming mad and really let Ed have it. He took it in good part. I know he was as concerned about these details as I was, because he proved it in his own stores in later years. But perfection is very difficult to achieve, and perfection was what I wanted in McDonald's. Everything else was secondary for me.

 

7

Harry Sonneborn.

That name on my appointment calendar in late May of 1955 was familiar yet strange. I remembered having talked to him on the telephone a few times about Multimixer sales when he was vice-president of Tastee-Freeze. Now he'd called to tell me he had resigned from Tastee-Freeze, sold all his stock, and he wanted to come to work for me.

“I heard about your operation in Des Plaines, so I went out to look it over,” he said. “I can tell just by watching it from across the street that you've got a winner there, Mr. Kroc, and I'd like to be part of your organization.”

“Call me Ray,” I told him. “I'd be interested in chatting with you, but I must tell you that I'm not in a position to hire anyone.”

“I'd like to try and change your mind about that, Ray,” he said. So we arranged a time to meet in my office.

Truthfully, I knew I needed help. But I also knew that I couldn't afford it. Prince Castle Sales was funding my entire operation, paying my salary and that of June Martino in addition to most of the costs involved in setting up my new franchise system. Then I had the added burden of buying out the Frejlack interest in Cook County, to the tune of $25,000. My share of the profit from the Des Plaines store, after splitting with Art Jacobs, didn't leave much. Moreover, from my experience in opening that store, I could foresee that unless I moved a lot faster, expenses were going to gobble up my $950 license fees long before a franchise could complete its building, generate business, and start returning 1.9 percent of its sales to me. I was spreading myself far too thin as it was, so the only way to speed up the franchising process would be to hire someone to help. I was damned if I did, doomed if I didn't.

Harry Sonneborn was thirty-nine years old when he came in to see me. He was almost six feet but looked taller, because of a kind of awkward, Lincolnesque angularity about him. He wore his hair cropped in a German military cut that suited the disciplined intensity of his manner. We found that we talked the same language concerning the franchise business and its potential. Obviously, as Harry said, it was a business fraught with a great deal of danger. Developing a franchise system and enforcing high standards would be difficult. Also, of course, there was the growing specter of government regulation. As we discussed these things, it became evident to me that Harry was exactly the man I needed to help me get McDonald's going. The problem remained, though, as I explained to him once more, that I could not afford to hire him. His answer was that he would go home and figure out the lowest possible salary he could take and still be able to support his family; then he'd get back to me.

I had to admire his persistence, and also the resolve he had that he would devote every working minute to McDonald's—twenty-four hours a day if necessary. I believed him. It was exactly the way I felt, and June Martino, too.

All my thoughts led to the conclusion that I had to hire Harry. I could visualize him handling finance while June ran the office and I was responsible for operations and new development. With that sort of setup, we could move ahead rapidly, which was the only way to go. In the first place, I had to mobilize my franchise sales and start generating some cash flow. Second, I was in the field by myself at the moment, but I knew that others would soon be jumping in to compete, and I wanted to take full advantage of my head start.

In a few days, Harry called back and said he could come to work for $100 a week take-home pay. It was an offer I couldn't refuse. Good thing for McDonald's that I didn't, because the company could never have grown as it did without the unique vision of Harry Sonneborn.

Harry was born in Evansville, Indiana. His parents died when he was very young, and he was brought up by an uncle who had a men's clothing factory in New York. Harry loved New York City. He grew up there in that climate of reverence for literature and art that is typical of so many Jewish families. But somehow, after college at the University of Wisconsin, he landed in Chicago to stay. He never lost that New Yorker aloofness, though, and this made me bristle sometimes. Yet I had to admire the way he studied the legal and financial problems we were steaming into. 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. We were breaking new ground, and we had to make a lot of fundamental decisions that we could live with for years to come. This is the most joyous kind of executive experience. It's thrilling to see your creation grow. It's dangerous, of course, because a small mistake can be absolutely ruinous. But in my definition, an executive is a person who rarely makes mistakes.

One of the basic decisions I made in this period affected the heart of my franchise system and how it would develop. It was that the corporation was not going to get involved in being a supplier for its operators. My belief was that I had to help the individual operator succeed in every way I could. His success would insure my success. But I couldn't do that and, at the same time, treat him as a customer. There is a basic conflict in trying to treat a man as a partner on the one hand while selling him something at a profit on the other. Once you get into the supply business, you become more concerned about what you are making on sales to your franchisee than with how his sales are doing. The temptation could become very strong to dilute the quality of what you are selling him in order to increase your profit. This would have a negative effect on your franchisee's business, and ultimately, of course, on yours. Many franchise systems came along after us and tried to be suppliers, and they got into severe business and financial difficulty. Our method enabled us to build a sophisticated system of purchasing that allows the operator to get his supplies at rock-bottom prices. As it turned out, my instinct helped us avoid the antitrust problems some other franchise operations got into.

Another judgment I made early in the game and enforced through the years was that there would be no pay telephones, no jukeboxes, no vending machines of any kind in McDonald's restaurants. Many times operators have been tempted by the side income some of these machines offer, and they have questioned my decision. But I've stood firm. All of those things create unproductive traffic in a store and encourage loitering that can disrupt your customers. This would downgrade the family image we wanted to create for McDonald's. Furthermore, in some areas the vending machines were controlled by the crime syndicate, and I wanted no part of that.

Our first three franchises were sold in Fresno, Los Angeles, and Reseda, California. Those stores opened the year after the Des Plaines operation got started. It was easier to swing deals in California, because landlords could be shown the successful operation the McDonald brothers had in San Bernardino and, consequently, were more readily persuaded to put up our kind of building for lease to my franchisees. It was painfully slow going, like trying to ice skate on bare concrete, but we worked like mad, and in the last eight months of 1956 we opened eight stores, only one of them in California. The first franchise in the Midwest was in Waukegan, Illinois, a city on the shore of Lake Michigan about forty miles north of Chicago. It was an incredible experience. The landlord was a banker, and he was very skeptical about the prospects of our fifteen-cent hamburger business. He really didn't think our operator would be able to make the rent. The franchisee was doubtful, too. I asked Ed MacLuckie to go up and help open the store, and he ordered all the supplies. Before long I got a phone call from the operator, and he was madder than a hornet. “You guys are trying to ruin me!” he yelled. “MacLuckie has got more meat and buns in this place than I'll be able to use in a month.…” My, how he raged! But that store took off like a barn fire the day it opened, May 24, 1956, and Ed had to make a panic run back to the Des Plaines store to borrow enough meat and buns to get Waukegan through the weekend. The operator, needless to say, was happy to eat his words. The owner of the real estate however, was convinced that I'd pulled a fast one on him. I don't think a day of that twenty-year lease passed that he didn't wish he'd demanded a lot more. Of course, beyond my faith in the fast-food concept, I had no better idea than he did about how the location was going to do. 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. In some ways I guess I'm naive. I always take a man at his word unless he's given me a reason not to, and I've worked out many a satisfactory deal on the strength of a handshake. On the other hand, I've been taken to the cleaners often enough to make me a certified cynic. But I'm just too naturally cheerful to play that role for long, even after dealing with the likes of Clem Bohr.