When you think of McDonald’s you might think of the Big Mac or maybe a McFlurry, but there is more to this global fast food chain than meets the eye. Behind this businesses is a story of innovation and entrepreneurship that can be inspirational to each of us.
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Here’s a transcript of our conversation:
Brittany: Hi, Connor.
Connor: Hey, Brittany.
Brittany: So today I wanna talk about an American staple, one that exemplifies, you know, perseverance, innovation, and most importantly deliciousness. So today I wanna talk about McDonald’s and how it became a fast food giant. and also it offers, this is gonna be a weird one. McDonald’s has offered more nutrition to people for a cheaper price than ever before in history. So more people are able to get the nutrition they need from McDonald’s.
Connor: I gotta be honest, when you say nutrition and McDonald’s in the same sentence, I kind of scratch my head a little bit. In fact, most people associate more with like junk food and unhealthy eating, right?
Brittany: Right. And don’t get me wrong, eating McDonald’s every day is probably not gonna be the best thing for you. But, you know, people maybe like you and I can afford to go to the store and afford to get vegetables. But for people who live in extreme poverty, being able to go buy a 99 cent burger is, has been, you know, a lifes save for them. It’s keeping them alive. But, and because of business innovation and the mindset and its ability to franchise across not just America, but across the globe, it’s been able to make itself the cheapest and most nutritious food that has ever existed in human history. So when we talk about, people say things are getting worse, McDonald’s of all things is kind of proof that things are getting a little better.
Connor: And just to define one of the words that you gave in there, cuz it may be new to our audience franchise. When you franchise a business, you basically replicate it. you copy it. And, and so I might create a brand new restaurant and then I’ll franchise that. Meaning I will let other business owners use my logo, use my brand, my recipes, and they will kind of own it and run it. But it’s all under the same kind of company and, brand that way. So that’s franchising. When you see McDonald’s all over the place, there’s all kinds of different people who own the different, you know, McDonald’s. And it, this is a fun topic cuz it puts a different perspective on things. I know, some of the history behind the brand, but it’s really interesting that it’s, been so instrumental to help feed people who otherwise couldn’t afford, you know, to get nice meals. They can at least get a lot of nutrition at a cheap rate, at a, something like a McDonald’s.
Brittany: Yep. And since you know a little bit, you can help me tell the story. And for the parents out there, the founder is an excellent movie, but not for kids. So if you know the kids are in bed, I highly recommend watching it. It’s really good. But, so let’s start from the beginning. McDonald’s was started by two brothers and Connor, I’m gonna let you guess what their last name was. What do you think? Was
Connor: It Thompson?
Connor: Probably McDonald’s. Right?
Brittany: It was probably McDonald’s. So these two brothers lose their jobs after the Great Depression, which we’ve talked about before. And, they noticed a local hotdog and root beer vendor stand that was doing great because even though people were suffering, they still had to eat, right? So they were spending, you know, I don’t know how much, it was probably like a dime, maybe less, to get these two things. And there’s a saying that imitation is the greatest form of flattery. And these brothers decided to open a similar stand just miles away where they sold hotdogs and orange juice.
Connor: Oh, that does not sound like an appetizing combination.
Brittany: I agree. Mostly because I’m a huge root beer fan, but also like you said, gross. I don’t even know, but okay, back to the story. So the location, and this is where we get into, you know, trial and error. And we’ve talked about that a lot with entrepreneurship. The location of the brothers stand was not great. The business wasn’t booming a few towns away. It was, there was a lot of academic activity. So without the ability to buy a new stand, cuz remember they’re not rich, they decided to load the new one on a truck and move it, which was not, we see that happening all the day, like all the time. Now I know I’ve been on the freeway and seen like houses on, you know, big trucks. But, so they started a new, or they build their new stand, move it, not build it, sorry. And they started a b a barbecue joint, but they realized very quickly that the only things that we’re really selling were burgers, fries, and soda. So they tried to focus on specializing, which we’ve talked about before on only three products.
Connor: And this is actually a kinda an interesting example, I think we see in a lot of success stories from entrepreneurs is this idea of specialization, right? Where when you identify something you’re good at and it’s something that consumers or customers want, then that’s what you focus on and you get really good at that, right? Like, think of In and Out Burger, right? they have a very simple menu. They’re not Denny’s where they’ve got like, you know, 94 things on the menu. It’s like, Hey, we’re really good at hamburgers. This is what we’re known for. And, then they can succeed. And everyone knows that’s, you know, when you want a good burger, you can, I mean, there’s obviously a lot of places, but in and out has built a brand like that McDonald’s, right? It sounds like they realized early on, like that specialization, principle is really important, especially when you’re getting started as a business too.
Brittany: Yep. And that helped ’em trim back on what they didn’t need, right? Because barbecue involves a bunch of different categories of meat. So back in the day, and this is what I find most fascinating, there weren’t drive-throughs, there were drive-ins. And I think Sonic, if you have a sonic near you tries to follow this kind of model. But it was people in roller skates that went from the restaurant where the kitchen was to the car grabbing food and bringing it out to you. Now, this wasn’t very efficient. so McDonald’s changed that. but back in the day, people would park, oh, no, no, back in the first McDonald’s, assuming people parked, walked up to the window and ordered their food. And this cut down on cost too, because you didn’t have to pay servers going back and forth. So it wasn’t a drive-through yet, but it was a whole different model that people weren’t used to.
Connor: Well, I think drive-ins, they also, you know, brought food, out on the actual dishes that was like really expensive. Sometimes people just drive away with the nice plate or, you know, whatever. And so, McDonald’s, as I recall, they were the first to switch to, what are called disposable products. So, you know, just like paper, right? That you could just throw away when you’re done. So to deliver their food, they would use disposable products, so that they could take, you know, an existing model, which in involved, you know, transporting and you know, kind of delivering this food, but then made it better, made it cheaper, made it make more sense, you know, kind of a hassle, right? If you’re sitting there eating in your car on a nice plate that you have to then like call the person out to come get it and you have to wait for them, right? Instead, like, Hey, let’s just piece trash, throw it in the trash and let’s go. And so that’s a, another good sign I think of entrepreneurship is identifying what’s being done right now and just a little incremental, tiny little way that you can make it better. It can actually be a pretty revolutionary successful business model.
Brittany: one side note too, drive-ins were actually associated with, like bad behavior because that’s where high schoolers would go on dates and listen to their loud music and hang out. And so they were not family friendly places, so that’s what McDonald’s did that as well. But one thing that was their own idea, and this is where McDonald’s is to me, just amazing the speed drive-ins took forever. I mean, you could be waiting for 20 minutes. McDonald’s brought what was, you know, a 20 minute thing down to 30 seconds. And, and that’s where fast food was born. And there’s a scene in the movie where, Michael Keaton orders his burger and they give it right to him. And he’s like, what is this? They’re like, it’s your burger. And he’s like, no, like I just ordered. They’re like, yeah, Exactly.
Connor: The fact that it’s so fast, I mean, is really just brilliant. Like, we’ve all been to a restaurant, we know how long it takes to wait for food and even sometimes burgers can make 20 minutes. So when you trim the time down like that, I think one of the brothers went, you know, onto a tennis court and kind of drew out a model of what would become the new restaurant. Like, okay, here’s where the fryer would be, here’s where the refrigerator would be, here’s where people are gonna stand. And they’re like mapping it out on this tennis court to try and look at just the flow of all the employees who hands one thing off to the next, where does the burger kind of travel on as journey of getting cooked and then going to a bun and then getting wrapped and the condiments and so forth. And so that planning, right of just looking at it at a high level, trying to figure out the most efficient way to, do the burgers, to do the fries, right? It’s this production line in a sense. But each area of the store had to focus on its one little specialized, concept. They even, you know, would create these little gadgets in order to put the toppings on, like, you know, the mustard on multiple burgers at once, rather than like squirting and squirting and squirting at one. It’s like, hey, if I could do like six at once, right? Have a little grid of three and three and a little machine that would go, poink, okay, great, you’re saving like five to 10 seconds, but when you’re doing hundreds and hundreds and hundreds of burgers a day, 365 days of the year or whatever, right? That adds up. And it’s, it was that relentlessness of finding every little area to shave off to make it quick, to increase the, the customer satisfaction, to decrease the cost, which you could then pass those cost savings on to the customer by lowering the price of the burger. these were substantial innovations that, made everything better and really kind of served as a model for, a lot of people to, imitate. As you said earlier, imitation is the sincerest form of flattery. Well, you know, McDonald’s in that sense was flattered to a great degree because people soon learn like, Hey, this model, works to us today in 2021. It just seems, you know, simple. But, these were brand new ideas back in the 1950s where, you know, entrepreneurs were saying, how do we take something that’s already happening and build upon it to make it even better and change it so that the customer is happier, the cost is lower. And these were, I think, really important innovations.
Brittany: Yeah. And there’s a family friendly clip that I’ll include in the show notes where it actually shows the employees running drills on that tennis court. Like to get, you know, the thing perfected it, and you might scoff when I say that these burgers were as cool as Elon Musk building rockets, but for one, I love burgers. I’m a burger enthusiast. And second, you know, same as Elon Musk, the brothers wanted to be the best at their craft. And I mean, they basically invented the fast food genre.
Connor: One part of the history I thought, is funny is, you know, people didn’t know how to react. Like every time there’s a new technology or a new way of doing things, Brittany, I’m gonna pick on you, a little bit here just for fun, cuz it relates like, you and I are using this, this software right now to record, and they just changed it on us. The whole design is.
Brittany: I’m not happy,
Connor: Yeah, and you and I were just talking about before recording, like, oh, we gotta learn like where the new buttons are and what does this do, right? And so, I think that relates, that’s just part of kind of the human condition, right? Like, people are like, they resist change. You know, when bicycles came out, right? People were terrified. I mean, of bicycles, there were all these like news clippings of how they were gonna be all these problems and everything, right? The camera comes out, right? The internet, all the cars, all these things, cell phones. And so when McDonald’s asked people to get out of their cars instead of driving up to the drive-in, you know, there were some angry people and when they’re asked to eat out of a bag, right? Instead of on dishes, they’re, they’re angry again. And, so it’s that resistance to change, that you’ve gotta be a really committed entrepreneur to stick with that. Because you might say, well, that’s customer feedback. They clearly want to eat on plates, and so we should continue plates. But then you got like the Steve Jobs of the world, right? The, the co-founder of Apple where his, his mentality would be, you know, customers don’t always know what they want. They don’t always know what’s good for them. And it’s our job to think of how their life can be better and encourage them to make that transition through the change. Like think of Apple, right? Every time over the years, they’ve always got, like, when they got rid of the CD drive in computers, people were upset. What do you mean we can’t use CDs anymore? Us don’t use CD anymore today, right? You know, and, and on and on phones like, oh, we have to use Bluetooth. You’re getting rid of the earphone Jack. Like all the time over the years they’ve always kind of done things that disrupt what we’re used to. But then looking back it’s like, oh, well, yeah, like it’s inevitable that we’re transitioning away from CDs or from FireWire cables or from, you know, old usb into the new usb. And so sometimes as an entrepreneur, like the takeaway for me is that you have to be careful about listening to your customers because because of their fears and their resistance to change, right? They might trap you into the current way of doing things just because that’s what they’re used to and what they prefer when in fact there may be a better way of doing things that you have to kind of lead them through. And I see that in the McDonald’s story where there was that resistance to, you know, eating out of a bag and walking up to the teller. But, now, like, it just totally revolutionized kind of the way things are done.
Brittany: Now Connor, I want you to introduce another character. And this guy could be seen as hero or villain, which you talked about in another podcast. and he is not a McDonald’s brother, but I was wondering if you could tell us a little bit about a man named Ray Crock.
Connor: So, okay, so this guy Ray, he sees, you know, that there’s this opportunity. He’s kind of the business guy, right? The brothers had, tried to do these franchises. They had tried to kind of start, some additional things, but Ray was this kind of ideas, man, this business man, and he’s traveling the country, this sales guy, right? This long stretches of highway people are driving all over the place. And so he is wondering like, why isn’t this restaurant franchising and attracting even more customers? But he’s the salesman, right? The brothers are like not convinced and so he’s trying to sell them and they reluctantly agreed to eventually working with him and franchising and, and so he ends up kind of changing a lot of things, right? He really wanted to streamline things. He wanted to, you know, change the brand. He wanted to make a bunch of different changes. And the brothers think it like, this is your baby, right? this is like your restaurant. And so there’s a lot of resistance. even it’s kind of funny, right? Here’s the McDonald’s guys who are leading their customers, through new changes cuz they’re resistant to change. And so they kind of get it from that side, but then here comes Ray Crock, who’s like, no, we gotta do all these things different in the business. And so then the brothers, you know, are kind of resistant. and, but, you know, Ray Crock is the guy who’s helping really scale the business. He’s looking for even more efficiencies. He’s wanting to export this idea, you know, across the country, and make a lot of changes. And so he’s kind of the guy that, that comes in early on and helps really grow the business beyond what the brothers had been able to do.
Brittany: And just as kind of an ending to the story, even though Ray Crock was brilliant, I mean, he’s the reason that you could go to Israel, you can go to China and you can still find a McDonald’s. Like, that’s pretty incredible. But he did do some shady things. He ended up kind of, well, not kind of, he ended up stealing the company from the brothers. So there were some shady things that happened there. In fact, at the end of the brother’s life, I think they were, they only had like $1 million, which I know is a lot to people like you and I, but when you look at how much money McDonald’s made over the long run, that’s nothing. So there were some shady practices, but that is not, you know, the moral of this story, the moral of the story is McDonald’s made fast food, right? It invented the genre. And Ray Crock, for all his faults, expanded this. And I mean, this is the reason we can go to in-n-Out when it’s snowing and not have to get out of our car, right? We can go to McDonald’s. So I think that’s pretty incredible. I don’t know, Connor, you have any closing thoughts on that?
Connor: No, I think you’re right. Like all entrepreneurs, in fact, in our Tuttle Twins guide to inspiring Entrepreneurs, there’s plenty of, people in that book who did things that I disagree with, who made choices that I think were wrong. I mean, Steve Jobs, who I mentioned was in many respects and awful human being, as like a person, you know, he had a lot of faults. I mean, just the story with his daughter, you know, like, yeah, he was a, not a good dude in many respects, and yet on the business side, he’s like this visionary and so to a previous episode, right? You can be a hero and a villain kind of in different respects at the same time. I think that plays out here too with Ray. He did a lot of smart things. the brothers did a lot of smart things. It’s really interesting to see in the early days of McDonald’s how entrepreneurship was making things better and how people were having to just go along for the ride, get over their discomfort, and eventually were like, Hey, no, we actually like this model better. We like not having to wait. We light not having to pay for a lot of money. We don’t have to necessarily agree with all the business or personal decisions that people like Ray or others make along the way to still appreciate the lessons in entrepreneurship and the examples that we could see in stories like this and, and the ideas that can give us in our own lives about what are the inefficiencies, what are the problems that if we could solve them, we could build a business around that. There’s just a lot of good examples and inspiration I think to draw from that. And so as Brittany mentioned, guys, you can head to the show notes page, Tuttletwins.com/podcast. We’ll have some resources there for this episode. And, make sure as well that you’ve got the Tuttle Twins Guide to Inspiring Entrepreneurs. You can find those at Tuttletwins.com/products, to be reading stories of entrepreneurship and be learning these lessons for our own life. Brittany, great topic, and as always, until next time, we’ll talk to you later.
Brittany: Talk to you later.
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