Lecture Notes on Dick McDonald and the Founding of McDonald's

Introduction

• PBS Documentary: "Burger Town" (1994)
• Interviewee: Richard McDonald, co-founder of McDonald's Hamburgers (with brother Mac) in 1948.
• Significance: The McDonald brothers are pivotal in the history of fast food.

Initial Interview with Dick McDonald

• Producer: A documentary about Southern California's hamburger scene.
• Connection: Interview arranged through Jeffrey Tennyson, author of "Hamburger Heaven."
• First Impressions: Dick was jovial, energetic, and happy to share his story.

Early Life and Career

• Depression-era Background: Grew up in Manchester, NH; limited job opportunities.
• Move to California: With brother Mac, they moved to California seeking better prospects.
• Initial Jobs: Worked in Hollywood; did various tasks (set pushing, driving trucks).

Transition to Food Business

• Rundown Theater: Took over a lease on a struggling movie theater (1931-1938).
• Shift to Food: Inspired by a competitor (Walter Wiley's root beer and hot dog stand) to enter the food business.
• New Establishment: Built a roadside stand selling hot dogs and orange juice (1937-1940).

McDonald's Drive-In

• Drive-In Concept: Transitioned to a car hop drive-in in San Bernardino in 1940.
• Operational Challenges: Slow service due to car hops and fry cooks dating.
• Decision to Innovate: Recognized the need for a faster service system to keep up with the evolving customer preferences.

Innovation and Development

• Self-Service Trend: Closed drive-in to switch to a more efficient service model.
• Initial Struggles: Slow initial sales, customers confused by the new system.
• Breakthrough: Gained popularity as construction workers and families embraced the speed of service.

Franchise Development

• Golden Arches Design: Developed a new building design featuring arches to attract customers.
• Testing Menu Items: Experimented with condiments and customer service.
• Franchising Decision: Initially hesitant, but after selling 20 franchises, decided to expand this way.

Encounter with Ray Kroc

• Ray Kroc's Interest: Came to the McDonald brothers via milkshake machine sales; offered to help franchise.
• Contractual Agreement: Kroc was contracted as a franchise agent with strict rules regarding changes to operations.
• Tension with Kroc: As Kroc pushed for more autonomy, friction developed between him and the McDonald brothers.

Sale of Business to Kroc

• McDonald Brothers' Decision: Decided to sell the business to Ray Kroc for $3 million in cash.
• Post-Sale Frustration: Kroc branded himself as the founder, leading to discontent among the McDonald brothers.

Reflections and Advice

• Wisdom Shared by Dick McDonald: Emphasized the importance of enjoyment in life; not to take it too seriously.
• Life Perspective: Advocated for relaxation and maintaining good social relationships.

Conclusion

• Legacy: The story of the McDonald brothers highlights the complexities of entrepreneurship and innovation in the fast food industry.