(4 of 10)
Millions of Americans have become virtually addicted to "junk food" as exemplified by McDonald's menu. "The food is good and the price is right," observes Pete DeKramer, an IBM programmer of Mahwah, N.J. David Green, a night, auditor in San Francisco, is enthusiastic: "McDonald's is my favorite place to eat in the whole world. I've eaten at McDonald's all around the country. I wouldn't move to any town that didn't have one."
Such ardent loyalty has made McDonald's one of the business successes of the century. Since the company sold stock to the public in 1965, system-wide sales have increased sixfold, from $170.8 million a year to the $1.03 billion in 1972, and profits have zoomed from $3.8 million to $36.2 million. Company-owned outlets now account for about 28% of sales and 16% of profits. In the first six months of 1973, sales rose 47% and profits 46% above a year earlier. The growth has kept the stock at stratospheric heights; $5,000 invested in McDonald's shares a mere seven years ago would be worth more than $320,000 at last week's close of 64⅛.
Fast-Food Pharaoh. The man behind this success is named not Ronald McDonald, the ketchup-topped clown celebrated in company advertising, but Ray A. Kroc, a crusty, saltily spoken 71-year-old Chicagoan who is rather amused to find himself the pharaoh of fast food. "When I was a little boy, my father took me to a phrenologist," he recalls. "I was told that I would make my best living either in the food business or as a musician. You know, I've done both." After serving alongside Walt Disney in the World War I Red Cross Ambulance Corps, Kroc played piano in Chicago bars and restaurants and sold paper cups. His keyboard technique never earned him much of a living, but he sold enough cups to become Midwest sales manager for Lily-Tulip. In 1937 he quit, and for $ 10,000 bought exclusive sales rights to the Prince Castle Multimixer, a machine that could mix six milkshakes at once.
Enter, from left field, the Brothers McDonaldRichard and Maurice. They came to California from New England in 1928 in search of jobs in the movie industry, but became co-owners of a movie theater in Glendora, Calif. In 1940 they opened a hamburger drive-in near Pasadena, and in 1948 converted it to a self-service restaurant with some of the features of a modern McDonald's. "We were the first in the business to use infra-red heat lamps to keep the French fries warm," claims Richard McDonald, now retired in Bedford, N.H. (Maurice died in 1971). The McDonalds franchised six more outlets, on which they began putting golden arches in 1952. Two years later, the chain had grown enough to buy eight Multimixers for a single restaurant from Ray Krocwho was so startled by the size of the order that he flew to San Bernardino to see what kind of business could be producing it.