Ruthless decisions are common in business.
Emotions are put to one side as negotiators analyze the facts and work to create a deal that best suits their company.
Sometimes these decisions are massively successful, sometimes, they are disastrous.
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McDonald’s is now a global monolith, with restaurants around the world (You can find which countries it is banned in here).
But before it became a household name, its founders were victims to one ruthless businessman named Ray Kroc.
Kroc spotted the potential of the original incarnation of Mcdonald’s in the 1950s and made it his own.
Who was Ray Kroc?
Ray Kroc was a milkshake mixer salesman for a company called Prince Castle.
He first came across Richard and Maurice McDonald in 1954 after they bought eight of his Multi-Mixers for their restaurant in San Bernardino, California.
After agreeing on a franchise deal with the brothers, Kroc played a major part in the McDonald’s we see today, insisting on uniformity in service and quality at all locations.
What happened next?
Originally, McDonald’s only opened in suburban areas.
The thinking was that restaurants were not allowed to be built in poor areas as the impoverished residents might break in when they were closed.
Eventually, in 1961, Kroc bought McDonald’s for $2.7 million, which meant each brother would get $1 million after tax.
He had become frustrated with the brothers for wanting to have a small number of restaurants.
But a row broke out because the brothers refused him the real estate and rights to the first San Bernadino site.
Kroc openly broke the contract he had signed with the brothers, before claiming McDonald’s was his restaurant and filing a lawsuit.
However, the brothers were not financially strong enough to fight a lawsuit against Kroc, so they had no choice but to surrender their rights and sell them at a discount.
Ray Kroc: “I didn’t invent the hamburger. I just took it more seriously than anyone else.”
Some criticized Ray Kroc’s business practices for lacking ethics and patience, others felt it was just good business practice.
Kroc died in 1984, by which time McDonald’s had 7,500 outlets in the U.S. and 31 other countries.
It had made $8 billion the previous year, which gave Kroc a personal fortune of $600 million.
Kroc spoke at length about the deal.
He said: “When I saw [Maurice and Richard McDonald’s restaurant in San Bernardino, Calif.] working that day in 1954, I felt like some latter-day Newton who’d just had an Idaho potato caromed off his skull.
“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.”
The story of the deal is told in the movie “The Founder”, a clip of which can be found below.