How a Man Scammed McDonald's for Millions of Dollars

let's see McDonald's hamburgers and some french fries hmm don't they look delicious some triple thick McDonald's shake the fast-food business was invented by two brothers who replaced carhop services with take out windows customers didn't like the idea of having to serve themselves and drove off business went down the brothers almost quit three times but in time customers came back they couldn't resist that equality hamburgers fries and milkshakes after 15 years a salesman convinced them to franchise a restaurant he took charge of opening them and helped the company reach its first billion but the brothers never got a piece of those profits in the 1900s Richard and Maurice McDonald were born into a poor family of Irish immigrants in the rural New Hampshire their father Patrick worked as a shift manager at a shoe factory in the city after 42 years he was told he was too old to do the job any longer and was laid off after the brothers discovered he was cut loose without a pension they knew they had to leave home for a better life they made up their minds that one way or another they would be financially independent when they graduated high school they vowed to be millionaires by age 50 the opposite of where their dad had been at that age they dreamt about directing and producing movies and landing gigs in the 1920s they moved to California and worked for Columbia movie studios for only $25 a week they did grunt work setting up lights and driving trucks and saved every penny in 1932 they decided to start their own business and bought a rundown movie theater in Glendora it was called the beacon they opened during the Great Depression and struggled to pay their bills they even buried silver in their backyard encased the bank foreclosed on them they usually ate one meal a day and it was often from a hotdog stand near the theater it was one of the few places in town that stayed in business in 1937 the brothers called it quits sold Beacon and decided to try their luck in the food business - they convinced a lot owner in our case to allow them to set up their own hotdog stand they knew nothing about food service but they hired a co who showed them the ropes two years later they started scouting for locations for a bigger restaurant and settled on San Bernardino in 1940 they opened a barbecue restaurant that turned out to be successful but after World War two they realized the business wasn't growing even though their parking lot was always full so they decided to close the restaurant and reopen with a different design one that they would come up with on their own in an interview Richard explained most architects don't really understand drive-ins maybe it's because not many ever worked in one at a tennis court behind their house the brothers grabbed some chalk and drew a floor plan and equipment layout on the ground five employees joined them and pretended to prepare hamburgers french fries and milkshakes the brothers goals were to find the right measurements create an efficient system that same night arraigned and the chalk washed away the brothers had to start all over again three months later they reopened the restaurant and shortened the menu instead of offering dozens of options they only served hamburgers fries and milkshakes they also replaced their carhop service with takeout windows so that each customer will receive their order in less than a minute many of them drove off when a carhop didn't come by their window others complain about the limited menu business dropped more by half and the brothers were close to losing everything in an interview Richard said we almost threw in the towel three times people said we were cuckoo nobody wanted to wait on themselves or throw away their own trash slowly the business started to pick up again and drew in huge crowds by 1953 their gross sales had skyrocketed to over $300,000 annually a year later the brothers had sold 21 franchises and opened nine outlets at that time Ray Kroc was a milkshake machine salesman he kept getting calls from restaurant owners all over the US asking for the same thing I want one of those mixers of yours like the McDonald brothers have in San Bernardino California he got curious and started looking into them San Bernardino was a quiet town practically a desert back then yet the brothers had eight milkshake machines in the restaurant it was shocking to raise since each one costs a hundred and fifty dollars apiece one day he flew from Chicago to Los Angeles for business the next morning he drove to San Bernardino to check out the McDonald's brothers restaurant it was a typical ordinary-looking drive-in but it was surrounded by a huge crowd he peeked inside and saw that the kitchen became an assembly line one person cooked the burgers one wrapped them another one made the milkshakes and yet another worked at the counter it was the most impressive operation he had ever seen so he stuck around for a few hours and introduced himself to Richard and Morris in his memoir he wrote that night in my motel room I did a lot of heavy thinking about what I'd seen during the day visions of McDonald's restaurants dotting crossroads all over the country paraded through my brain in each store were eight multi mixers whirring away in paddling a steady flow of cash into my pockets the next day he told the brothers that he'd seamed tons of restaurants in drive-ins but none had the same potential as theirs he asked him if they would be open to franchising the brothers went silent after a moment Morris told him see that big white house there with the wide front porch that's our home and we love it we sit out on the porch in the evenings and watch the sunset and look down on our place here it's peaceful we don't need any more problems we are in a position to enjoy life now and that's what we intend to do Richard said it would be a lot of trouble and question who would open the franchises for them ray leaned forward and said well what about me by the time we flew back to Chicago he had a freshly signed contract in his suitcase in the contract Ray was given rights to open franchises in the US and receive 1.9 percent of the gross sales the brothers would be given 0.5% out of that percentage each building would have to have the same design and carry the McDonald's name he wasn't allowed to do anything differently unless it was approved by the brothers in writing even though he was 52 years old had diabetes and arthritis he was convinced the best was ahead of him he started looking for a location right away and a lot in Des Plaines that turned out to be the easy part for him after meeting with a contractor he realized that there was a problem with the design he had to follow unlike the San Bernardino location he needed to create a basement for the furnace the brothers sold ready to go ahead and build one but they never gave their approval in writing it was then that Rey realized his contract would create a lot of issues his attorney gave up on the situation when he hired another one he quit too and said that he was crazy to continue under such conditions he warned Rey that if the brothers decided to shut him down he couldn't protect them let him try ray said in 1955 ray finally opened his first franchise every morning he went down to the restaurant to help his staff open in his memoir he wrote 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 happen to be wearing a good suit until his restaurant made a profit he continued to sell milkshake machines to pay the rent and his staff by 1956 he opened a handful of successful franchises but he still found himself running out of cash and the bank threatened to foreclose on his house mortgage it was then that his CFO Harry Sanborn pointed out we are not technically in the food business we're in the real estate business the only reason we sell fifteen cent hamburgers is because they are the greatest producer of revenue from which our tenants can pay us our rent he came up with an idea to solve their money problems starting a new company to buy land and buildings and sublease them to franchises that same year they launched the franchise Realty corporation Harry's idea worked and the business significantly increased its revenue they signed up more franchises and promoted the slogan in business for yourself but not by yourself it was one of the secrets to their success but Turay it wasn't enough to turn his vision into reality he wanted to end his relationship with the brothers and buy them out the brothers asked for 2.7 million dollars in cash and insisted on keeping their San Bernardino's ront at the time it made about $100,000 annually ray was furious he needed the income from that store eventually he mcDonald's across the street and ran them out of business the brothers also asked for half a percent royalty on all future McDonald's proceeds Rey agreed but convinced them to keep it out of their contract because it would mess up his accounts the brothers never received a single cent from the royalties today they would have been worth over a hundred million dollars per year in Rey's memoir he wrote if they had played their cards right that half a percent would have made them unbelievably wealthy this is the story of how it all began with the restaurant that invented the fast food business which part did you find inspiring let us know in the comments below

Channel: Hook

Views: 1,884,024

Rating: 4.8802695 out of 5

Keywords: mcdonalds, how mcdonald's fries are made, how mcdonald's commercials are made, mcdonald's commercial, mcdonalds story, mcdonald's story, the rise of mcdonalds, mcdonalds history, fast food, history of fast food, inspiring stories, inspiring

Id: 2hA-Vf4DJYs

Length: 9min 29sec (569 seconds)

Published: Tue Apr 21 2020

Reddit Comments

[u/TruthversusSlander]

Finished watching 'The founder' movie about two McDonald's brothers who were the original founders and one businessman whose effort is the reason we can all enjoyed McDonald's franchises internationally or in our own respective country.

My personal experience as a customer at McDonalds and KFC is the McDonald's staff are well trained at being friendly to customers, they are helpful and always welcoming customers with a friendly smile. They are professionally well trained. What I'm trying to say is they have training classes for that.

But at KFC, not so much. A few of us have watched a video about two female siblings who work at KFC and they've been fighting with each other while working. And my personal experience is about KFC workers who badmouthed their customers. It's not to say that KFC do not have the best franchise or outlets. I used to visit KFC restaurant at Pertama Complex a few years ago and they have one of the best freshly made KFC fried chicken there. Tbh, not every franchise or outlets of the same brand of fast food restaurants are the same in the taste of the food and the quality of service.