McDONALD'S Behind the Arches By John F. Love Bantam. 470 pp. $ 19.95
MENTION McDONALD's and most people think "hamburgers" (and those with taste, "fries"), but if you know a little business lore, then McDonald's triggers one name, Ray Kroc.
Kroc was the genius who invented fast food, discovered the McDonald brothers, then marketed, franchised, menu-planned and refashioned their little hamburger stand into a company with $ 10 billion in annual sales. That's the legend, anyway.
But now, a new 470-page corporate history (with McDonald's Inc. cooperating) retells the tale and, as they say in the retail biz, Kroc is "repositioned."
He did not, after all, invent fast food, or discover the McDonalds, nor was he good at finance, and he came up with one horrible menu idea after another. (My favorite is the Hula Burger: grilled pineapple and two slices of cheese on a toasted bun. It bombed.)
What Ray Kroc did well, says John F. Love, a former Business Week editor, now a banking writer) was to create a system that linked three very different sets of people behind the idea of a good, cheap meal. Each group -- the headquarters team, the potato, meat, paper and dairy suppliers, and the store-owner franchisees -- ran its own businesses, but Kroc had such a strong, simple vision and so indoctrinated each group that he created an almost Japanese business entity. McDonald's is not one company. It is an amalgam of hundreds of separate businesses that every day function together to sell a third of all the hamburgers we buy.
Since Ray Kroc has already told us how he did it (Grinding It Out) in 1975, one gets the feeling that this book was written for the post-Kroc era at McDonald's (especially for the new chairman, who gets very sympathetic treatment) because, by letting the small fry tell their tales of how McDonald's grew and how Kroc operated, the founder has to share credit with a host of previously invisible people.
AMONG the most interesting are the McDonald brothers, Dick and Mac, who in 1948 closed their successful drive-in restaurant in San Bernadino, California, and reopened three months later with the world's first assembly-line food service, a fifteen-cent burger, and, over the objections of their architect, the arch.
The McDonalds made so much money and were so nice (they shared all their trade secrets with their neighbors and within a few years created many competitors) that they almost drove themselves out of business.
That's when they met Ray. Not Mr. Nice Guy, he licensed their system, tinkered with it (making them angry), enlarged it (making them suspicious), bought their trade name for $ 1 million each (making them rich), and then opened a McDonald's across from theirs and drove them out of business.
I also admired Ray Kroc's secretary, June Martino, a woman in a company that treated women worse than pickles. (Kroc was never sure about pickles. He eliminated them in 1958, when he found too many discarded in store parking lots. Pickles were restored six months later. Women had a tougher time.)
For most of Martino's career, no women were employed at the McDonald's stores. Kroc thought young women would attract teen-age males, who would, in turn, repel parents and children. Kroc wanted families, so it wasn't until a brave franchisee in Indiana hired the wife of his preacher that the barrier was breached. Even so, McDonald's in the '70s insisted on "matronly" women. Says Love, the operations manual outlawed "false lashes, eye shadow, colored fingernail polish, iridescent lipstick, rouge and 'excessive use of strong perfumes.' "
"Women with serious complexion problems should not be scheduled for window work," the manual said.
Yet, in this environment, thinly disguised as a secretary, June Martino was one of the most powerful people at McDonald's headquarters. She recruited franchisees, mediated major interoffice rivalries, un-fired people whom Kroc had fired; and Kroc, for all his woman-bashing, acknowledged her contribution. He gave her a 10 percent interest in McDonald's. It wasn't worth much when she got it (in the '50s), but when the company went public in 1965, Martino the secretary was suddenly worth $ 5 million. What's more, Kroc put her on the board of directors.
There's a full chapter on board member Harry Sonneborn, who created the real estate deals that saved the company from early bankruptcy. Fred (now chairman) Turner shares credit with Jack (the French Fry King) Simplot for figuring out how to produce the "perfect" French fry, but my favorite character, by far, has to be Den Fujita, chief of McDonald's Japan.
An outrageous promoter, he launched his chain with this promise: "The reason Japanese people are so short and have yellow skins is because they have eaten nothing but fish and rice for 2,000 years . . . If we eat McDonald's hamburgers and potatoes for a thousand years, we will become taller, our skin will become white and our hair blond."
By 1985, McDonald's had 500 stores in Japan and was the country's largest restaurant chain.
There is still room for another book on McDonald's, one that's a little more critical of the company's treatment of franchisees, nutritional issues, and present management. It is true that, while he lived, Ray Kroc so hogged the limelight that no one else at the company got public credit for anything. People had the impression that Ray did it all, alone. Now, after meeting Mac and Dick and June and Fred and Jack the French Fry King and Den Fujita, we learn he didn't. Kroc's successors couldn't have asked for a nicer book.?Robert Krulwich is economics correspondent for the CBS Morning News.