Back in 1954, Ray Kroc was a 52 year old milkshake machine salesman on his way to visit clients in San Bernardino, about 55 miles east of Los Angeles, where he experienced what can only be termed a true creative vision.
His clients were a couple of guys named McDonald who operated a squeaky clean restaurant churning out hamburgers, fries, shakes – nine menu items in all – for rock bottom prices. Kroc saw the future then and there. “I felt like some latter day Newton who’d just had an Idaho potato caromed off his skull,” he said later.
He talked the McDonalds brothers into letting him franchise their concept, though they were highly skeptical. He set out to replicate their restaurant and its products carefully, making sure every franchise was just like every other franchise.
But it didn’t come easy. Kroc’s original franchise plan made money for the franchises, but very little for Kroc. He resolved his dilemma by going into real estate – buying or leasing store sites and then subleasing them to franchisees at inflated prices. By controlling the leases, he also controlled his managers and their products. He was able to set up a nationwide hamburger assembly line.
In 1984, Ray Kroc died at 81, just a few months before McDonald’s sold its 50 billionth hamburger. A year later, when the value of McDonalds $4 billion real estate portfolio passed Sears, the New York Stock Exchange added McDonalds to the Dow.
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