- What makes Ray Kroc and the brothers different from each other?
In terms of background and experience, Ray Kroc initially worked as a milkshake machine salesman. His sales and entrepreneurial experience provided him with a sharp ability to recognize the potential of the McDonald’s brothers. The McDonald’s brothers had previously been involved in the movie theater and restaurant businesses, accumulating relevant experience. When it comes to entrepreneurial drive, Ray Kroc appears more like an entrepreneur. He valued the McDonald’s brand and consistently expanded its brand impact. He possessed strong determination and ambition, along with the courage to transform McDonald’s into a vast franchise empire. In contrast, the McDonald’s brothers displayed innovation in developing the restaurant concept and placed significant emphasis on the quality of McDonald’s food.
- Do you think the McDonald’s brothers did the right thing by selling out to Ray Kroc? Did Ray Kroc give the brothers a good deal？
I think that, considering the circumstances at that time, it was a good decision. The McDonald’s brothers selling their business to Ray Kroc could provide them with a substantial income. They received upfront payment from Kroc and ongoing franchise usage fees, which added financial security and stability. While the offer might have been a favorable figure back then, as McDonald’s grew significantly in influence and the profits generated by the franchise network multiplied exponentially, the share that the brothers ultimately gained from the success of the franchise might have been relatively small in comparison. At that point, the initial offer might not have seemed as substantial. It’s important to note that the evaluation of their decision involves the context of the era and the unforeseen magnitude of McDonald’s success.
- How did the local store franchisees make money?
For local store franchisees, the revenue generated from their McDonald’s location is their primary source of income.
- How did Kroc make money? How was that different than the franchisees, running the local stores?
Ray Kroc’s sources of income: 1. Making money by charging new franchisees upfront fees when they join the McDonald’s system. 2. Continuously collecting franchise usage fees based on a percentage of the total sales of franchisees. 3. He created a separate company, the Franchise Realty Corporation, to acquire land and lease it to franchisees. This allowed him to earn rental income from franchisees in addition to other fees. 4. Earning revenue from franchisees by marking up the cost of supplies and raw materials purchased from suppliers he contracted with. This allowed him to benefit from economies of scale achieved through bulk purchasing. In contrast, franchisees’ income is relatively limited, primarily coming from operational revenue.
- Does this film change your view of McDonald’s? After watching this film, my perspective on the McDonald’s industry has undergone a significant transformation. Previously, I only focused on the burgers and fries in the store, but now that I’ve gained insight into the entire developmental journey of McDonald’s, I’ve realized that there’s a intricate business network behind it. It encompasses the innovative management wisdom of the McDonald’s brothers and the ambitious business expansion of Ray Kroc. In fact, I believe that both elements are indispensable. Moreover, McDonald’s existed in the business environment of 1950s America, which adds a certain depth of business culture and atmosphere to its brand. At times, I feel that selling sentiment and culture can be more meaningful than merely selling products.
