RAY KROC: THE MASTERMIND BEHIND MCDONALDS

Breaking Down The Strategy

In 1954, a failing salesman by the name of Ray Kroc travelled to San Bernardino, Califonia in order to sell two brothers on milkshake mixers for their fast food restaurant.

But when he got there, he realised this wasn’t just another prospect on his list.

This place was different.

Over the next 12 months, Kroc would worm his way into becoming the McDonald brothers’ franchise agent.

And over the next 7 years, Kroc would grow McDonald’s across the United States making it a household name.

Before finally buying the company from the McDonalds Brothers in 1961 in a manner which… well, let’s just say he certainly didn’t have the best morals.

By the time Ray Kroc passed in 1984, he had grown McDonald’s to:

• 7500 U.S. Stores

• 36 International Stores

• Total sales of $8+ billion

It’s safe to say it’s one of the most impressive success stories of all-time.

But while everyone tips their hat to Ray’s unbelievable operational skills, they completely overlook his marketing ability.

I spent the last 3 hours analysing McDonald’s early growth & marketing.

Here are 6 lessons on marketing, from Ray Kroc:

Lesson 1: Have A Way To Get Attention

In the film “The Founder” (that covers Ray Kroc building McDonald’s) there’s a scene where Kroc walks into the McDonald’s brothers office and sees a concept photo of the first “Golden Arches”.

Kroc’s eyes light up.

Because whilst the brothers are brushing the arches off as just a cool addition to their restaurants, Kroc sees it as a vital part of the McDonald’s brand.

He says:

God knows how much of that quote from the film is factually correct. But what it does is give a core principle that has made McDonald’s the brand it is today.

You see the golden arches → You know there’s a McDonalds.

And there is one in every town across the world, just like Churches and court houses.

How much revenue would McDonald’s make without those big golden arches in the sky?

My guess is they probably wouldn’t even be close to where they are today.

Lesson 2: Brand Is Everything

In 1961 when Kroc finally bought McDonalds, it’s said that Dick McDonald asked Kroc.

“We showed you everything, the whole system, our secrets, we were an open book. So why didn’t you just steal it?”

Kroc’s response:

Which goes to show just how important the McDonald’s brand was to Kroc.

He could’ve gone away and implemented the exact same system under the name “Kroc’s”.

• It would have been much easier

• Much cheaper

• And much less stressful

But he knew that the most important thing about McDonalds is the brand and the name.

That home grown feeling, like the beef came straight from Mr. McDonald’s farm.

That all comes from the brand.

Lesson 3: Focus On The Feeling

In 1967, to ward off emerging competition, McDonald’s spent $2.3 million on a major national advertising campaign.

This TV commercial was one of the core components of the campaign:

Now, notice the messaging of the ad.

About 10% of the ad actually includes McDonald’s food.

The rest consists of:

• Families having a good time

• Kids singing

• And a consistent message that “McDonald’s is our happy place”

Because McDonalds’s were never trying to compete on the quality or taste of their food (both were never great).

They compete on the feeling you have when you’re there.

You don’t get a feeling from being at:

• KFC

• Burger King

• Or Subway

Because those guys try to compete with their food.

That’s not the case with McDonalds - at least under Kroc!

Lesson 4: Have A Brand Character

1 year prior to the “Happy Place” ad, McDonald’s launched their first ever TV commercial.

As you can see, the ad featured a rather scary looking Ronald McDonald.

But besides the fact the character would scar most young kids today, Ronald McDonald was actually a huge hit.

In fact, he was so popular that they created a set of friends for him (that I think they still use today).

Why was this a genius from Kroc & McDonald’s?

2 reasons.

1. It gave the brand a face

Nike have Michael Jordan.
Facebook have Mark Zuckerberg.
McDonald’s? Ronald McDonald.

2. It helped paint McDonald’s as the place to take your kids.

Again, compare that to competitors:

KFC → Greasy buckets of chicken
Burger King → Big burgers

McDonald’s → A place American families go to break bread.

Remember that quote from Ray Kroc regarding the churches? Yep, it comes full circle right here with their advertising.

Lesson 5: Aim At Kids, Deliver For Parents

In 1979, McDonald’s introduced (what I would call) one of the best marketing plays of all time – The Happy Meal.

Prior to the Happy Meal, nearly all fast found restaurants were aimed at adults.

They pushed:

• Great taste

• Big portions

• Fast delivery

Yet they missed out on a huge factor that people take into account when they make decisions - their kids.

Yes, parents want great food.

But more than that, they want to have a relaxing time where their kids aren’t moaning about not wanting to be there.

And that’s exactly what McDonald’s gave people.

• It was something kids wanted

• It was simple to order

• It could be consumed without much fuss (it’s all in a box)

So kids all over the world began screaming for a Happy Meal when they saw the golden arches and parents started bringing them to McDonald’s when they wanted a stress free meal.

They marketed to the kids, but delivered for their customers - the parents.

Lesson 6: Understand Your Customers

Between 1967 and 1974 Kroc added rocket boosters to McDonald’s expansion when he started to franchise McDonald’s overseas.

In just that 7 year period they opened stores in:

• Tokyo, Japan

• Sydney, Australia

• Geneva, Switzerland

• Zaandam, Netherlands

• London, United Kingdom

In virtually a blink of an eye they went from American fast food chain to global fast food chain.

At first, Kroc was very persistent that the menu’s would stay the exact same.

They had a menu and he wanted to stick with it.

But as time went on and McDonalds expanded into more and more markets he began to understand that the menu would have to expand to accommodate what other cultures enjoyed eating.

So McDonald’s pivoted to have a core menu of 5 globally standardised items:

• Big Mac®

• Cheeseburger

• Hamburger

• Chicken McNuggets®

• Fries

Every restaurant HAD to serve those items, but were able to add new additions if approved by McDonald’s leadership team.

This led to McDonald’s serving items such as:

• Sausage and Egg Twisty Pasta (Hong Kong)

  

• Coconut Stick Rice Pie (Thailand)

  

• Ham & Cheese Pockets (Australia)

  

This may seem like a nothing move and maybe it’s not really marketing, but it’s a prime example of how important it is to adapt to your customers needs.

If McDonalds wouldn’t have done this, would they still be the global powerhouse they are today?

Maybe.

But they certainly wouldn’t be operating & thriving in 118 countries like they are today.

Well, this turned into a mix of Kroc + overall McDonald’s marketing lessons but hopefully you found it just as valuable and interesting.

I can’t lie to you, this one took forever to put together. So, if you did enjoy it please do share it with a friend or colleague - it would be much appreciated :)

Until next Sunday.

— Niall

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This has been a breakdown of Ray Kroc’s marketing lessons. I hope you have learned something and can implement a similar strategy in your business!

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