The Ray Kroc Story

How do you create a restaurant business and become an overnight success at the age of 52? As
Ray Kroc said, “I was an overnight success alright, but 30 years is a long, long night.”

Origins
In 1917, 15-year-old Ray Kroc lied about his age to join the Red Cross as an ambulance driver,
but the war ended before he completed his training. He then worked as a piano player, a paper
cup salesman and a Multimixer salesman. In 1954, he visited a restaurant in San Bernardino,
California that had purchased several Multimixers. There he found a small but successful
restaurant run by brothers Dick and Mac McDonald, and was stunned by the effectiveness of
their operation. The McDonald’s brothers produced a limited menu, concentrating on just a few
items – burgers, fries and beverages – which allowed them to focus on quality and quick service.

They were looking for a new franchising agent and Kroc saw an opportunity. In 1955, he
founded McDonald’s System, Inc., a predecessor of the McDonald’s Corporation, and six years
later bought the exclusive rights to the McDonald’s name and operating system. By 1958,
McDonald’s had sold its 100 millionth hamburger.

A Unique Philosophy
Ray Kroc wanted to build a restaurant system that would be famous for providing food of
consistently high quality and uniform methods of preparation. He wanted to serve burgers, fries
and beverages that tasted just the same in Alaska as they did in Alabama.

To achieve this, he chose a unique path: persuading both franchisees and suppliers to buy into his
vision, working not for McDonald’s but for themselves, together with McDonald’s. He promoted
the slogan, “In business for yourself, but not by yourself.” His philosophy was based on the
simple principle of a 3-legged stool: one leg was McDonald’s franchisees; the second,
McDonald’s suppliers; and the third, McDonald’s employees. The stool was only as strong as the
three legs that formed its foundation.

“If I had a brick for every time I’ve repeated the phrase Quality, Service, Cleanliness and Value,
I think I’d probably be able to bridge the Atlantic Ocean with them.” – Ray Kroc
System First
First and foremost, Kroc advocated adherence to the system approach. So while many of
McDonald’s most famous menu items – like the Filet-O-Fish, Big Mac, and Egg McMuffin –
were created by franchisees, the McDonald’s operating system required franchisees to follow the
core McDonald’s principles of quality, service, cleanliness and value.

The Roots of Quality

McDonald’s passion for quality meant that ingredients were tested, tasted and perfected to fit the
operating system. Kroc shared his vision of McDonald’s future, selling his early suppliers on
future volumes. They believed in him and the restaurant boomed.

Again, Ray Kroc was looking for a partnership, and he managed to create the most integrated,
efficient and innovative supply system in the food service industry. These supplier relationships
have flourished over the decades. In fact, many McDonald’s suppliers operating today first
started business with a handshake from Ray Kroc.

Hamburger University
In 1961, Kroc launched a training program, later called Hamburger University, at a new
McDonald’s restaurant in Elk Grove Village, Illinois. There, franchisees were trained on the
proper methods for running a successful McDonald’s restaurant. Hamburger U utilized a
research and development laboratory in nearby Addison, Illinois to develop new cooking,
freezing, storing and serving methods. Today, more than 275,000 franchisees, managers, and
employers have graduated from the program.

The Legend Lives On

Right up until he died on January 14, 1984, Ray Kroc never stopped working for McDonald’s.
His legacy continues to this day, providing McDonald’s customers with great tasting, affordable
food; crew and franchisees with opportunities for growth; and suppliers with a shared
commitment to provide the highest quality ingredients and products.

From his passion for innovation and efficiency, to his relentless pursuit of quality, to his many
charitable contributions, Ray Kroc’s legacy continues to be an inspirational and integral part of
McDonald’s – today and into the future.
One Milestone At A Time
From the first drive-thru to the first Chicken McNuggets, we’ve had a lot of memorable
milestones. For a snapshot of our accomplishments, take a look at our interactive History
Timeline.
Growth Strategy
In March of 2017, we introduced our Velocity Growth Plan, named as such
because we’re moving fast – and in a clearly defined direction.
We know the most meaningful way to grow the business and create value for
all of our stakeholders is by serving more customers more often. That’s why
we’re focused on giving customers what they really want: hot, delicious food
served quickly – with an overall experience and value for their money that
meets their rising expectations.
Velocity makes the most of our competitive advantages, from our unmatched
global scale to our iconic brand to our tremendous presence in local markets
around the world.

The key pillars of our growth strategy are to:

Retain
Retaining the customers we have, fortifying and extending our areas of
strength with focuses on breakfast and family occasions.

Regain
Regaining the customers we had lost by improving the taste and quality of
our food, enhancing convenience and offering strong value.

Convert
Converting casual customers to more committed customers with coffee and
snacks.

We also identified three accelerators, intended to drive growth on top of

everything we’re doing:

Digital
Re-shaping our interactions with the customer – whether they eat in, take
out, drive thru or order delivery.

Delivery
Bringing the McDonald’s experience to more customers – in their homes,
their dorm rooms, their workplaces and beyond.

Experience of the Future in the U.S.

Elevating the customer experience in the restaurants through technology and
the restaurant teams who bring it to life.

We’re proud of the progress we’ve made the last couple of years – and
confident that guided by our Velocity Growth Plan, we will continue becoming
a better McDonald’s for customers.
Business Model
The power of our franchisees, suppliers and employees working together
toward a common goal is what makes McDonald’s the world’s leading quick-
service restaurant brand.

 Franchisees bring the spirit of entrepreneurship and commitment to

communities
 Suppliers are dedicated to highest levels of quality and safety
 The company facilitates learning and sharing across McDonald’s more
than 36,000 restaurants

A Collection of Small Businesses

While a global Brand, the vast majority of McDonald’s restaurants – more
than 80% worldwide and nearly 90% in the U.S. – are owned and operated
by approximately 5,000 independent, small- and mid-sized businessmen and
women.
Franchisees often live in the communities they serve and are committed to
making a positive impact locally – from providing good food, customer
service and job opportunities, to supporting local charities and other ways of
giving back.

Freedom Within a Framework

We pay special attention to how our customers are alike – and how they are
different too. For that reason, markets and countries have latitude when it
comes to menu, marketing, community involvement and local business
management. See McDonald’s around the world.

Responsible Leadership

We are committed to using our scale for good: good for people, for our industry, and for the
planet. From simplifying ingredients to being nutritionally mindful; from reducing our waste
impact to advancing the industry on sustainable and humane sourcing; from being a good
employer for millions to giving help to those most in need via RMHC.
Progressiveness

We are a restless company: always innovating, always moving forward. From our original
business model to the invention of the drive thru and the Happy Meal, we're working to do things
better tomorrow than we do today.

Local Integration

McDonald’s has traveled far but we stay in sync with society in

each of our countries, responding to local needs and integrating with local culture. Our
restaurants are typically locally-owned, staffed by crew who live nearby, and who proudly give
back to their community via hundreds of thousands of local programs.
Using our

Scale for Good

We believe that delicious food can also be sustainable – for our customers, producers and the
environment. As one of the world’s leading restaurant brands, we’re using our Scale for Good to
make this vision a reality.

Our responsibility is our opportunity

Using our Scale for Good plays an important role in the Velocity Growth Plan, and is right at the
heart of our values. In order for people to feel good about visiting us, they need to feel good
about our food, our company and the impact that we have on the world.

The world is changing. The population is growing, cities are expanding and temperatures are
rising, stretching basic resources like water and food to their limits. These are complex
challenges that demand innovative solutions and collective action. As one of the world’s largest
restaurant companies, we have the responsibility and opportunity to take action on some of the
most pressing social and environmental challenges in the world today. We embrace this
opportunity to drive meaningful progress, and to do so by collaborating with millions of
customers, employees, Franchisees, suppliers and other partners.

These initiatives are most impactful when they go beyond the direct reach of our company to
influence action both within our business network and beyond. We call this using our Scale for
Good. We hope our efforts can drive real change, so they become tomorrow’s standard. It’s an
ongoing effort, and we’re always looking to what’s next.

Where we can make the biggest difference

While we’re committed to taking on many challenges facing society today, we’re elevating a few
global priorities where we believe we can make the greatest difference and drive industry-wide
change. We can’t do this alone – to make truly meaningful progress, we will need to use our
scale and reach to collaborate with others both within and beyond the McDonald’s system.

Our global priorities below reflect:

Analysis of major social and environmental impacts of our food and our business.

The material environmental and social issues that matter most to our customers and employees,
Franchisees, suppliers and wider stakeholders.

Climate Action

Climate change is the biggest environmental issue of our time. That’s why we’re committed to
reducing emissions right along our value chain, from farm to restaurant to customer, to hit our
science based target.

Beef Sustainability

We’ve been working with farmers, environmental groups and governments for more than a
decade to help advance beef farming and production practices. And we’re making progress.

Packaging and Recycling

We’ve set new progressive goals to improve our packaging, reduce waste and recycle more, to
amplify our positive impact on the planet.

Commitment to Families

In partnership with the Alliance for a Healthier Generation, we’re raising the bar with more fruit,
vegetables and dairy in our Happy Meals.

Youth Opportunity

Impacting the lives of young people through pre-employment job readiness training, employment
opportunities and workplace development programs, in partnership with the International Youth
Foundation.

A solid foundation

Beyond these global priorities, we will continue to drive progress on our goals and commitments
across key social and environmental topics such as forest conservation, diversity, animal health
and welfare, and supporting families and farmers. This is part of our ongoing effort to produce
food responsibly and take care of people and the planet.

Producing our food

We’re using our scale and reach to help create a food system in which people, animals and the
planet thrive. We use high-quality ingredients, support sustainable sourcing and promote animal
health and welfare.

Protecting our planet

We have both a responsibility and an opportunity to leave the planet a better place, by reducing
our greenhouse gas emissions, minimizing food and packaging waste, conserving forests and
protecting water resources across our value chain.

Supporting our people and communities

Whether in our restaurants, franchises or supply chain, an investment in those who work for us
means a positive impact in local communities around the world. This means working
environments that respect human rights and better opportunities for individuals, families and
farmers.

Sources

Grinding it Out: The Making of McDonald’s by Ray A. Kroc, ©Ray A. Kroc 1977.

McDonalds: Behind the Golden Arches by John F. Love ©John F. Love 1995.

aboutmcdonalds.com 2009.