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The McDonald’s Story

March 5, 2011

The story I am going to narrate here is about how an iconic brand made its way into the limelight and what innovations made McDonald’s what it is today.

To just set some background about what McDonald is today I have some of the basic info about Mcdonald’s

Number of Global Restaurants:
More than 32,000

Number of Countries:
117

Number of worldwide employees:
1.7 million

Percentage of franchised restaurants around the world:
More than 75%

Now on to the story behind how the McDonald’d brothers and Ray Croc made McDonald’s  world’s largest chain of hamburger fast food restaurants.

In the late 1940’s, Dick and Mac McDonald were searching for a way to improve their little drive-in restaurant business in San Bernardino, California. Rather than tinker with the business, which was bringing in a very comfortable $200,0001 yearly, they invented an entirely new concept based upon speedy service, low prices, and big volume.

They did away with car-hops in favor of self-service at the counter. They ditched their 25-item barbecue menu in favor of a limited menu of just nine items: hamburger, cheeseburger, three soft-drink flavors, milk, coffee, potato chips, and pie, with french fries and milkshakes added soon after they resumed operations. They re-engineered their stainless steel kitchen for mass production and speed with assembly-line procedures. And they slashed the price of their hamburger from a competitive 30 cents to just 15 cents.

When the new McDonald’s re-opened in December of 1948, business took a while to build. But it soon became apparent that they had captured the spirit of post-war America. By the mid-1950s, their little hamburger factory enjoyed annual revenues of $350,000 – almost double the volume of their previous drive-in business at the same location. It was not unusual for 150 customers to crowd around the tiny hamburger stand during peak periods.

For as little as a thousand dollars, franchisees would receive the McDonald’s name, a basic description of their Speedy Service System, and the services of Art Bender, their original counterman at the new restaurant, for a week or two to get them started.

But then, in 1954, a milkshake machine salesman named Ray Kroc saw the McDonald’s operation first-hand. The fast food industry was about to take off.

After the McDonald brothers explained that they didn’t have the personal desire to oversee the expansion of their concept across the nation, 52 year old Ray Kroc became their exclusive franchising agent for the entire country. A great salesman had discovered his ultimate product. Kroc formed the new franchising company on March 2, 1955 under the name of McDonald’s System, Inc.

Indeed, Quality, Service, Cleanliness, and Value – QSC & V – continues as McDonald’s operating principle today.

At the end of 1956, McDonald’s 14 restaurants reported sales of $1.2 million and had served some 50 million hamburgers. In just four years, there were 228 restaurants reporting $37.6 million in sales, and the company had sold its 400 millionth hamburger mid-way through 1960.

After buying the business from the McDonald’s brother’s at 2.7 million dollars, he opened Hamburger University in the basement of a restaurant in Elk Grove Village, Illinois, a training facility for new franchisees and store managers which has grown to be a worldwide institution utilizing sophisticated training techniques and high-level management courses.

McDonald’s broke the billion dollar sales mark in 1972 and the stock split for the fifth time, making 100 shares of the original 1965 stock equal to 1,836 shares.

In 1975, the first drive-thru operation was established in Sierra Vista, Arizona – an innovation that today accounts for about half of all McDonald’s restaurant sales in the U.S. and Canada. The company enjoyed sales of $2.5 billion that year, with 3,076 restaurants in 20 countries. The following year, hamburger number 20 billion was sold.

By 1990,  sales had grown to $18.7 billion, passing the milestone of 80 billion hamburgers sold. McDonald’s 11,800 restaurants were in 54 countries. And top leadership changed for just the third time in our history in 1990 – with Fred Turner becoming senior chairman and passing the baton to Mike Quinlan, who had begun working for McDonald’s in 1963 as a part-time mail clerk. In 1999, Jack M. Greenberg took over the top job, which was passed to Jim Cantalupo, former Vice Chairman and President, when Greenberg retired in December of 2002.

Ray Kroc’s dreams for McDonald’s growth throughout the United States had been more than satisfied…but that’s only the beginning of the story. McDonald’s took the world by storm as well.

While McDonald’s was astounding the experts with the rapid growth of its hamburger chain in the United States, our company had another big surprise brewing – international expansion.

And to reiterate what happened post the international expansion I will throw up the numbers once again,

Number of Global Restaurants:
More than 32,000

Number of Countries:
117

Number of worldwide employees:
1.7 million

India in its current state is in dire need of innovators and entrepreneurs like the McDonald’s brothers who changed the game trough simple yet really effective innovations.

After hearing this astounding story of innovations in the fast food industry, bloginnovation urges all you innovators to come up to the fore and create the Indian McDonald’s.

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