The world brands around us

Author: Fangcao Hou / Country: Mainland China
Publisher:
Publish Date: 2006-07-01
Features:
1. A Global Chain of Fast Food
1.1 McDonald's, the fast-food chain that is no longer named "McDonald," is today the largest fast-food chain in the world. Its outlets span nearly 30,000 locations across more than 120 countries and regions, with over 51 million customers dining there daily. Such a globally popular fast-food chain, however, had a rather development history in its early days. Even more astonishing is that if people knew how the founders of McDonald's once sold the company for a price less than about 330 times their current annual income, they would surely be filled with amazement and regret! There is no denying the historical fact that the current McDonald's chain no longer belongs to the original family that invented the name "McDonald."
In the 1930s, the United States was experiencing the Great Depression. The McDonald family, living in the town of New Hampshire in northeastern America, was struggling with unemployment. The closure of a local shoe factory led to the loss of their only job. Hard pressed by poverty, they could not afford to sit idle. The two sons of the McDonald family, Maurice and Richard McDonald, who were in their early 20s at the time, decided to venture out and seek work, even if it meant not getting rich, at least they could find a way to earn a living. Like the miners who had traveled west a century earlier to seek gold, the brothers also decided to head west to try their luck.
At first, the two brothers worked at a photo studio at a Hollywood movie studio, responsible for changing the background scenes of film sets. After some time, they decided to start their own business and rented a nearby movie theater to make a living by showing films. However, four years later, they were in debt, not only failing to make a profit but also unable to afford the monthly rent of $100. At that time, in Southern California, a new trend was emerging—the Drive-in Restaurant, where cars could drive directly into a parking lot, and customers could be served without getting out of their vehicles. These restaurants primarily served foods like hot dogs, hamburgers, and milkshakes.
In 1940, Maurice and Richard McDonald opened a small restaurant in San Bernardino, California, named after their last name, "McDonald." Perhaps it was perfectly timed with the current trend, and the small McDonald's restaurant quickly became popular, soon becoming a gathering place for young people. Their parking lot was always full, and at times, they could serve up to 125 meals simultaneously. The annual revenue of the McDonald's restaurant reached $200,000, with each of them earning about $50,000 in profit annually, which was no small sum at the time. The brothers' lives improved, and they each bought cars and moved into new homes.
Restless and eager for more, the two brothers made a remarkable change in 1948. They closed their original restaurant for three months, rented a new location with a service window, replaced the 3-foot grill with a 6-foot one, and transformed the Drive-in Restaurant into a hamburger stand. They switched to paper tableware instead of ceramic plates and silverware, laid off most of their servers and dishwashers, and reduced the menu from 125 items to just 9. All the food was pre-prepared and standardized. The hamburgers were uniformly topped with tomato sauce, mustard, onions, and two slices of pickled cucumber, kept warm by heating lamps. Although the term "fast food" had not yet been coined, the brothers' actions were laying the foundation for this new type of food industry.
After this reform, the price of each hamburger dropped to 15–30 cents. However, when the new restaurant first opened, many regular customers left, and business declined sharply. The brothers began to doubt whether their decision was wise. But with persistent effort, their business gradually picked up. Due to their low prices, McDonald's began attracting a new customer base, especially low-income working-class families. With their income, they could now afford to take their children and families to the restaurant for meals. The new type of fast-food restaurant gradually attracted a large number of such customers, and business became even more prosperous than before.
The success of the new fast-food model led to a significant increase in demand. One store could no longer meet the needs, and many people began to request the establishment of chain stores. One of those who requested a chain was Neil Fox, a businessman who owned a gas station. So, the brothers worked with an architect to design the McDonald's chain logo. Richard was the first to suggest using the golden double-arch symbol, which represented the first letter of the McDonald surname. Over the following years, McDonald's expanded to over 50 chain stores. The brothers had no grand ambitions at the time; their earnings were already more than enough, and they felt quite satisfied with themselves. They said, "We wanted to do something we enjoyed." Without Ray Kroc's involvement, McDonald's might never have grown into the national and then global giant it became.
Kroc was a 52-year-old milkshake mixer salesman. He sold a product called the "Prince Castle Multi-Mixer," a luxurious new invention that could mix six different milkshakes at once. McDonald's ordered eight of these machines, which piqued Kroc's curiosity: Who would need to make 48 milkshakes at the same time? One day in 1954, Kroc visited the McDonald's restaurant in California to see for himself how they could have such high demand. When he arrived, he was almost in disbelief. The bustling business and the speed of the McDonald's operations overwhelmed him. At the service window, customers lined up, ordering pre-prepared hamburgers and fries, with each customer served in just a few minutes. The consistency and speed of the food seemed to be the key to the restaurant's success.
When Kroc witnessed this, he immediately made up his mind to get involved in the business. The next day, he approached the brothers and offered to help manage and expand their chain stores. However, the brothers were not interested; they were already satisfied with their achievements and had no desire to expand further. With Kroc's persistence and repeated requests, the brothers finally agreed, and Kroc became the sales agent for McDonald's. Kroc immediately got to work, expanding the chain stores nationwide. He sold each franchise for $950, with franchisees paying McDonald's 0.5% of their annual revenue as a franchise fee and 1.4% to Kroc. By 1961, Kroc had successfully developed 300 McDonald's chain stores in the United States. At this point, McDonald's brothers became the only obstacle to Kroc's ambitious expansion plans. Kroc decided to buy out McDonald's and eventually paid $2.7 million for it.
After buying McDonald's, Kroc planned to expand to 1,000 stores in the United States. What Kroc himself could not have predicted was that by 1984, before his death, McDonald's would have 7,500 outlets worldwide. Today, there are 12,600 stores in the United States alone. If the McDonald brothers had still held their stake in McDonald's, they could have earned over $55 million annually just from franchise fees.
When asked why they sold the business, they said they were worried that this type of fast-food business would eventually become outdated. In reality, their concern about it becoming outdated was unnecessary. It is estimated that nearly 60% of Americans eat at McDonald's at least once a year.
P1-4