Transcript for: Dick McDonald: McDonald's Founding Story
[Narrator] In 1994, the
producers of the PBS documentary "Burger Town" traveled
to Bedford, New Hampshire to interview then 84
year-old Richard McDonald, who, along with his brother, Mac, founded McDonald's Hamburgers in 1948, which started the fast food revolution that changed everything. This is the story of the real founder. (jazzy piano music) You interviewed Dick McDonald in 1994, who along with his brother,
could arguably be called the most influential person
in the history of fast food when they started McDonald's Hamburgers. Tell us how did this interview come about and what were your initial
impressions of Dick McDonald when you first met him? - In 1994, I was producing a documentary called "Burger Town." It's about the history of
the southern California coffee shop, drive-in and hamburger scene. And I went about producing this
documentary, covering this, the history, post World
War II, up until 1997. Now, if you're going to tell this story, you have to tell the story
of the McDonald brothers in southern California. The McDonald brothers,
were an essential component to the history of the
burger and drive-in scene of southern California. The McDonald brothers invented the speedy system of serving up hamburgers. And so I arranged to meet Dick McDonald through a gentleman, through Jeffrey Tennyson. Jeffrey Tennyson wrote a book
called "Hamburger Heaven," and Jeffrey was in our
documentary as a historian. He talked about his
book and he talked about the southern California
hamburger and drive-in scene. He was wonderful. Jeffrey knew Dick McDonald
because he interviewed him for his own book. And so we arranged to meet Dick McDonald. And we pulled up to Dick McDonald's house. It was a modest home by any, you know, neighborhood standards. He comes greeting us with a big smile on his face. He had this resplendent brown
suit on, he looked great. He had a matching pocket square, a tie. And what I remember about Dick
at that particular moment, he was very jovial, very energetic. He just was happy to see us. And he was ready to tell us his story. And that story began in
Depression-era New Hampshire. (mellow guitar music) - Well, in those days, this
would have been about 1928. The town we lived in in
Manchester was a mill town Just about bankrupt. The town was down and as there just weren't
any opportunities. So you either worked at a shoe factory or you worked at a mill. And it was tough even
getting a job there too. So we knew we had to do something. So that was when, through a
distant relative of ours, who had been in California many, many years and had gotten a job on the
police department in Hollywood. So throughout the years, he got to know quite a few of the movie people so he told my brother, he said, "Mac,"
he says, "if you want to come
to Hollywood," he says, "I can get you a job
at one of the studios." So that was how it started and then about a year later, my brother said, "If you want to come
out, I think we can..." So I got a job there. So that was how that all all started. Well, we were just really
a couple of flunkies, let's be honest about it. We would push the sets around, we would drive the trucks, take the folks out on location if they were shooting location,
we'd handle the lights. And that was it. But I loved it there. God, it was interesting, you know, for me, just coming out from New Hampshire. But my brother and I could see that there were no opportunities there. 20 years from now, we'd still
be pushing the lights around and pushing the sets and
driving a truck so we knew we had to make a change. (mellow guitar music) Yeah, we found this little
rundown movie theater that this old gentleman
really, he really wanted to unload the lease, say. And of course, we didn't have any money, so we heard about it through
one of the boys on film row. So we went out to see
this old gentleman and we said,
"Now listen, "We're going to lay it on the line, "we don't have any money, but
we think you want to get out "from under this lease so
we'll take over the lease "and if we make any money,
then we can sit down "and talk about it." So that was... And we ran that for, oh, about seven years,
and those were tough. Those were the Depression years, you know, the thirties, from '31 to about '38 and everybody in the town was
literally starving to death. The businessmen, you know, the department store,
drug store, novelty store, because nobody had any money. This was an orange grove
town and of course, people weren't buying oranges. So those were tough, tough years. - The only business making
money in Depression-era Los Angeles at the time was the food business. And so Dick and Mac decided to get into the food business themselves. - Well, there was a fellow in
town, had a little root beer and a hot dog stand. Fellow named Walter Wiley and he was doing most of the business in town. He was doing okay. So one day my brother said, you know, "Dick,"
he says, "I think we're in the wrong business." He says, "Wiley's the only one making any money." So we built a little roadside stand near the Santa Anita racetrack and we just sold hot
dogs and orange juice. And the reason for the
orange juice was, as I said, this town, we had, the
theater was Glendora. It was an orange grove town. (mellow jazzy piano music) We ran that from 1937 to 1940. And in 1940-- In the meantime, we had wanted to build a real drive-in, you know, get away from just the hot dogs and orange juice. But once again, McDonald
brothers had a lot of ideas, but everything but money. This was funny. We'd go to a bank and this loan officer,
you know, he'd look at us and he looked down his nose at us. First thing, "What do you boys have for collateral?" We said, "Collateral?
"What is collateral?" All we have is a big smile. So one after another just turned us down. Well, we thought that San Bernardino was a blue collar town, working man's town, and that's what we wanted. We weren't trying to get the country club set or the socialites. This thing we wanted to
build, reasonable prices, and San Bernardino seemed
like a logical city to do that in. And so when we opened with the car hops, that was in 1940 and the opening went relatively smoothly. We had been going through
this thing with the car hops and so we didn't have any problems. But one problem we began to have was the car hops and the fry cooks. And the fry cooks would
want to date the car hops and if they couldn't get a date, that poor car hop's
order was a little slow, a little slow getting to her. So, oh yeah, well we
laid down a law as far as going out with the customers, too We said, "If these fellas are gonna
come in and pick you gals up, "you don't want to start with us. "And one other thing," we said, "If you have any intention of not working "Friday and Saturday
nights, you tell us now "because it's just a waste of time "filling out the application." Those were our two big nights. But it was a terribly slow. It was a slow system. Terribly slow. My brother and I would
check, sit out on a lot. And first of all, the
customer would come in and the car hop would take
a tray out and the menu, then she'd go back to the drive-in. Then she'd go back out again,
they weren't ready to order. So they'd be back and
forth a half a dozen times. And the system just... We could see that, you know, we were kind
of getting into an age of jet propulsion and this was really a horse and buggy operation. So that sorta put the idea. We knew we had to do something
to speed things up, yeah. Well of course, in those
days, the self-service bit was starting to come into vogue anyway so that sort of a put the idea into our head but we wondered
how the customers would accept being served in their
cars for so many years. See, we were there from 1940
until 1948 with car hops and oh, they loved this car service, especially when it was rainy and so forth. But we decided to take
the bull by the horns and we closed it down and when people found out
what we were going to do, they thought we had gone insane. 'Cause we had a great business. We had the most popular drive-in in town and people couldn't understand. They said, "My God, the McDonald's
brothers, I think that they're "losing their minds." But that was it. There was just a case of complaints and we could see that
something had to be done. They wanted the car hops and they didn't want to have
to get out of their cars. And also, because we had
eliminated all the nice glassware and dishes, everything was on paper and they weren't too happy about that. They just weren't happy
about any part of it and made no bones about letting us know it too. Well it took off very slowly, very slowly. First month it was pitiful, you know? People would come in,
they'd honk their horns, wanted a car hop. At night, they'd blink their lights 'cause they wanted car hops. We had signs all over the
place but people don't pay much attention to signs. And this went on first
month into the second month, into the third month. It had picked up a little bit, but sometimes in the old days, we'd look out on the parking
lot it'd be filled with cars. Now, we look out there
are probably three cars and maybe two of them were our employees that were parked out there. So it was tough. Three different times, we
almost threw in the towel because we just couldn't
get it off the ground. And one day my brother says, "You know, Dick,"
he says, "It looks like this was a dumb idea." He said,
"What do you think? "Should we call back the car hops?" Well I said, "If you want to do it, I'll go along." But our pride, God, our pride was hurt to think this was going
to be really a flop. So we decided, let's try it. Let's hang on a little bit longer. So we did. Well on about the end of the third month, it began to pick up a
little and we began to get the sales clerks, construction workers, cab drivers, and they
loved the speed of it. Or they could come in and bingo. So from then on, the thing just took off. And another big factor,
the youngsters loved it. They, for some reason, loved
to go up to the windows and put the order in themselves, carry the tray out. The kids loved it. So of course, when we had the kids, we had mama and papa, too. So as word began to
spread through salesmen throughout the country,
and we began to get a little publicity in the trade magazines, and the first thing we knew, people were converging
on us to see what was... what this was all about. We didn't call it fast food then, we didn't call it anything. (mellow guitar music) Well, when we decided to franchise, we knew this older circular building that we had was obsolete. And we knew that we had
to have a new building. So then we tried a couple of architects and they came up with these buildings. But they were low and
squatty looking like a, oh, more like a Dairy Queen
or something like that. So one night I'm in my office and I'm trying to do anything
to give the building a little height. So at that time, we lived in a big colonial
house with columns, four southern columns. So I drew in four columns. Well, they looked terrible. So then I drew in one
arch, running parallel with the building and
that didn't look too bad. So then I tried two arches the
way they eventually came out and that seemed to lift the building up. And that's the story of the golden arches. (mellow guitar music) We tested among the old crew, and
the cooks, and everything, different kinds of relishes,
and condiments, and so forth and it seemed as the most popular
ones where what we finally ended up with. And we didn't have too
much of a problem with special orders, but we still, we hated to hear 'em because
that really followed up the whole production line. Well the way we were
putting the condiments on the hamburgers was
a large wooden spoon. We'd have a container of mustard,
and container of ketchup, and so forth. And the boy would take a spoon and he pot it in and put a dab of mustard. But we found out, he found
out that he could speed his operation up, he'd
take one spoon, he hit two or three hamburgers. So one hamburger would
have this much ketchup, the other one would have... So one day, I went to LA and I remember
the little mint patties that the candy stores used to sell. So I found this candy factory
and I went in and I said, "Could I speak to the, the manager?" And he said, yes. So, a nice young lady came out and I said, "I'm a writer." And I said, "I'm a freelance writer and
I would like to do a story "on how candy's made, see?" "Oh,"
she said, "Come on," And I said, "I don't know if I can get
this printed anywhere." But I said, "I'll sure try." "Oh, come on in."
She said. So she started taking me
through the whole operation. These big vats of chocolates, you know? Well what I wanted was
the mint patty, see? So I said, "By the way, when I was a kid," I said,
"we used to buy those "little mint, peppermint patties." I said,
"How are those?" "Oh,"
she said, "We make those over here." And they had this marble
table with wax paper on it and they had this cone
shaped dispenser with a stick and a hole in the bottom. So they fill it with a confectionary and when they lifted the
stick up, causes a little dob of the confectionery came out. "Well, that's all I needed," I thought, "That's the answer." We'll do that with our
mustard and ketchup. So I thanked her and I said, "Now, if I got this in
a magazine," I said... Now I wouldn't dare tell you what candy place 'cause she come out today if she's still alive
and shoot me probably. But anyhow, I went back to San Bernardino. I said to my brother, I
told him what had happened. So we had a machinist in
town, used to do a lot of experimental work for us. So we told him about the cone shape. So he made the cone shape thing with the stick and it worked
pretty good, pretty well, but if they lift-- when they pull the stick
up, if they lift the stick out too much, you'll get too much. And if they pushed the
stick in too quickly, you had a little dob. So his name was Ed Toman. So I said,
"Ed, isn't there some way "you can put some kind of a
lever so when I push it..." Well he said, "We'll try." Well one of the time, he
handled that because the ketchup and the mustard would not
always be the same consistency. So sometimes when we
shot, there'd be too much drip through, but he
finally worked it out. (mellow guitar music) Well, you know, we came very close to discontinuing franchise. We had sold, I think,
oh, about 20 franchises. The first one was to a
fellow named Neil Fox, who bought it for Phoenix. And Fox had a lot of money, he had a chain of filling stations around Los Angeles. Well he came to us with his
partner, who had a fleet of salmon ships up in Seattle and they wanted to quit the franchising and they would put up all the money and we'd have our own units. And they wanted to build
them up up and down the Pacific coast for us
and then keep on going. So we told Neil Fox, "Neil, this is gonna take
an awful lot of money "to get something like that." He says, "We've got the money, don't
worry about the money." But the more we thought
about it, and you know, we'd been in business quite a
while then, my brother and I, and we knew what was gonna happen. We were going to have to run these, see? That was the stipulation with Neil Fox. McDonald brothers were gonna... Well that would mean
we'd be living in motels, we're traveling all over the country, we'd have all the grief of the problems and neither one of us had any kids, we had nobody to bring into our business. And we had a big meeting
with Neil Fox and this fella, his name was Smith from Seattle. And we said, "Well, we've decided to go
with the franchising route." We told them why, we said, "Well, and this'll be a tough program "to have to do... "Get the locations, get the financing, "get the buildings up, and
fight the zoning boards." We said, "We wish you'd have come
to us about 20 years ago. "Boy, we'd have kissed you, you know?" So first off, our first idea was not for them to use the name, McDonald's. We were just going to
sell them the building, the design, the equipment layout. They could come to our
place in San Bernardino for their training, with their managers, and then that was it, see? Flat fee, $2500 bucks, that was it. We had to have a franchise agent. We had to have a company,
to supervise these things. So that was how we
hired a franchise agent, fellow named Bill Tansey. And Bill had been sales
manager for one of the big... Either Arden Farms or
Golden State Creamery, one of those big outfits. Typical salesman, just like Ray Kroc, you know, very aggressive. So Bill started with us
and he sold about, I guess, about 20 franchises. And we opened, I think, nine places. But then Bill had some bad health problems and he had to withdraw. - [Narrator] We're about
to hear Dick McDonald talk about Ray Kroc and
hear in his own words how their relationship started and how it ended. A film called "The Founder"
was released in 2017 and it was the story about Ray Kroc and the McDonald brothers. Do you think Dick McDonald
would have been happy about this movie? And why do you think so, if you do? - Yes, I absolutely believe that Dick McDonald would have been happy with the movie, "The Founder." I was thinking those thoughts
as I was watching the movie, I was thinking about my
interview with Dick McDonald and things he was trying to convey to me. On the big screen, you see Ray Kroc in all his naked ambition and how he, you know, finessed the operation away from the McDonald brothers. It's up there on the big screen. (mellow guitar music) - In the meantime, Ray
Kroc had come out to see us because we had been selling so many of his milkshake machines. He was selling milkshake machines. That was good. He said, "You going to use my milkshake machines "in the McDonald's?" We said, "We intend to, it's a good product." So he went back to Chicago, about a week later, he called and he said, "Say, I understand that you've
lost your franchise agent." I said, "We sure have." He said,
"How about me?" The milk mixer business was going downhill because the drugstores were
taking out the soda fountains. They would raise big customers like the drug stores, you know? And so he could see that his business was going to be... were going downhill. So that's how we said, "Well, come on out, we'll have a session "with our attorney and
see what we come up with," and make a long story
short, that's what we did. Ray went to work as our franchise agent. The first time we talked to him, we could tell that he was
very, very aggressive. Very aggressive. Which you have to be to be a salesman. He was a typical... Had a nice personality and a terrific worker. We were very pleased to have Ray come with us. He went to work for us as
a franchise agent in 1955 and worked for us til 1961. Now, during that entire period, there was never any mention
of him being a founder of McDonald's, he was a franchise agent. But, when we sold out to him, boy, we were shocked. We started reading the media, "Ray Kroc, founder of McDonald's." We weren't too happy about that. We had a very strict
contract with Bill Tansey and we had the same
contract with the Kroc. They could not change a single item. They could not change the price. They could not add an item. They couldn't make a
single change of any kind without the written approval
of the McDonald brothers. And that led to a little friction later on because Ray thought we were
holding him down too much. But that was it. They had to get permission from the McDonald
brothers to any changes. Well the deal was, as I recall it now, and we're going back
down quite a few years, he was going to charge $1900 for a franchise and 1.9% of their gross sales. McDonald brothers were to get a half of 1% of the gross sales. And then he was already having too many expenses so we upped the down payment and so forth. But that was the initial payment. It was $1900 plus 1.9%
of their gross sales. There was a little friction
began to build up because Ray thought we had too
much control on 'em, see? Ray was a great idea man and he'd have one probably every 15 minutes. But some of them were not gems. So they began to have a little friction back and forth there because he felt that he was not given enough
freedom on the thing. So one thing kind of led to another. One day my brother said, you know, "Poor Ray, he's worried." He says, "Let's tell him if he wants
to give us $3 million..." You know, if you give
us $3 million in cash, he can forget the McDonald brothers. Yeah, next time we talked to him, we said, "Ray, you know, you've been talking about "wanting to buy us out." I said,
"This is the deal. "We want three million bucks." So we said, "There's gonna be a lot
of taxes on this thing." So that was the whole thing. I think they finally... After we paid all the taxes, federal and California had a stiff tax, I remember that my brother and I, we each had a million bucks in cash. Ray wanted to fine us 'cause
he didn't have about three, gonna take about $3 million in cash. So we said, "No, Ray, it has to be a cash deal." So he was mad, he says, "The McDonald's brothers, "they're millionaires now," he said,
"They don't need this money." So he said... Or we said, "Ray, if we don't get the
cash, we might as well "go along with a royalty deal." And so he finally got
it and it's interesting, he got it from... There were four colleges. There were Princeton University, there was a women's college Swarthmore, there was the Negro
college, Howard University, and if I'm not mistaken, the Ford Foundation came in on that deal, came up with the... but Ray said later on, he said, "It actually costs me
$18 million to buy out "the McDonald brothers." He said,
"By the time I got through "paying all the interest to
these colleges for their loans," he says,
"It actually cost me "18 million bucks." I think the one thing is
not take life too seriously. You have a very short span. I know many people, they, it looks to me like they think
they're gonna live forever. I've got news for them. They're not gonna live forever. And I say, try to enjoy it. Try to have some good friends that you can socialize with. But relax. Don't get all tightened up. Don't be worried about
this and worried about six months now. It's not going to do a bit of good Take it easy and enjoy life. (upbeat jazzy music) ♪ Powder your face ♪ ♪ With sunshine ♪ ♪ Put on a great big smile ♪ ♪ Light up your eyes ♪ ♪ With laughter ♪ ♪ Folks will be laughing
with you in a little while ♪ ♪ Whistle a tune ♪ ♪ Of gladness ♪ ♪ Gloom never was in style ♪ ♪ The future's brighter ♪ ♪ When the hearts are lighter ♪ ♪ So try and smile ♪