In Ray Kroc’s autobiography, Grinding It Out, Kroc reveals that in the beginning, the amount of profit from selling food was not great or really substantial. Ray actually didn't see profit for the first couple years. He had to find a new strategy to expand the company. Rather than raising the price of the food, Kroc took the advice of Henry Sonneborn to make money off the real estate of franchisees. McDonalds would seek out potential properties for a restaurant and buy it. Then the property would be rented out with a franchise fee to be able to sell under the McDonalds name. Equipment as well as supplies and ingredients would be bought by franchisees from McDonalds. This new system clearly worked and was revolutionary, its influence can be seen on many large companies today. In the magazine article, Corporations: Meat, Potatoes, and Money, published by in 1961 TIME magazine it reads,“Kroc's Chicago friends scoffed, but once they saw the crowds line up to buy at his first stand, 15 of the scoffers took out franchises. Since then, demand for franchises has become so hot that Kroc has increased his price from the original $900 to $12,500, plus a 2.2% royalty on monthly sales. Currently, there is a paid-up backlog of 60 would-be licensees waiting (some for more than a year) for a Kroc-assigned location. Including down payments on equipment, rent and signs (all paid to Kroc), plus working capital, a licensee needs at least $40,000 to sell his first hamburger.” Kroc’s success led other fast food chains to copy their system in hopes of the same results.The book Forbes Greatest Business Stories of All Time by Daniel Gross, has information at the end that talks about how McDonald’s managed their food when the franchise went overseas. It is a secondary source that was written in 1996. Even though it is secondary, it provides information that corroborates with several other sources and the information used is not something that would likely be impacted by bias. Also, the author Daniel Gross has a master’s degree in American history, making him qualified to talk about this subject. It was also published by Forbes, which is the leading American business magazine, so how McDonald’s does business is within their knowledge. Part of the reason why McDonalds has been able to maintain success for over 60 years is their ability to adapt and market to different places around the world. A McDonalds in America is drastically different than one in India. In order to avoid the religious problems towards beef In India they replaced all their beef with lamb and vegetable patties making it accessible to that market. Also in the mid 70s when their beef burgers sales began to dip Ray hired Rene Arend to create a chicken dish. Which is now known as the famous chicken McNuggets. Its this ability from McDonalds to adapt in their local surroundings and on a global scale which ensures their place at the top of the fast food throne. These unique marketing strategies have impacted how other large chains expand, think local and act global. Ray Kroc’s unique management and approach to the global expansion of McDonald’s around the world was an innovative strategy that has influenced modern day companies around the world. Ray Kroc’s belief of acting big but thinking small is a policy held by many companies today. His success acted as a model to other companies, and others saw that it was a great strategy for them to also adopt. His use of leasing the land to each McDonald’s and revolutionary real estate strategy absolutely changed the preconceived notion of how a company should expand. His unique economic strategies have had an effect on the corporatization of the world, but also popularized the idea of fast food. When he first discovered McDonald’s, its idea of fast food was completely fresh, and he saw the great potential it had. As the franchise’s success began to grow, fast food’s potential began to be realized by others and other franchises arose.
McDonald's can be seen as cultural center stone of consumerism in America and it's development over the years. "One of the ironies of America’s fast food industry is that a business so dedicated to conformity was founded by iconoclasts and self-made men, by entrepreneurs willing to defy conventional opinion. " This quote from Fast Food Nations shows how modern jumbo companies in America like McDonalds all start with humble beginnings. The development of McDonalds helped industrialize the world and America for better or for worse. Todays factory like system at companies like McDonalds can be traced to Ray Kroc's original vision and inspiration when he walked in on the octagonal McDonalds. When his ideas began to expand McDonalds began to industrialize the restaurant kitchen. Most chains and restaurants today in general depend on a low paid and unskilled work force. Prior to Ray Kroc a kitchen would depend on a couple skilled and high paid chefs. These chefs would maintain this job for years on end and it would be their main job. Today if you go to McDonalds or Burger King or any big named fast food franchise it would become apparent that theres a large staff of people maintaining one separate undemanding job. Most workers only get minimum wage and a large portion of workers at fast food restaurants quit after less then a year. But the ease the jobs provide mean that anyone can come at any time and just be one small cog of a bigger machine. Ray Kroc's original vision of how a restaurant or store can be maintained at a efficiency like that of a factory by simplifying the work and lowering wages has in turn shaped how the majority of major companies today runs it's stores.