Rakesh Nair

Project Manager


What can we learn from Ray Kroc?

Mcdonalds success  

We all are aware of  the legendary businessman Ray Kroc who gave us Mcdonald's.  What makes him unique is that his product is not  a fast food restaurant but Mcdonald's itself. He didn't follow the traditional Brand name franchising model but created business format franchising. By adopting business format franchising you just don't use the brand name but the entire way of doing business by replicating every process of business. Here are five things we can learn from this legendary businessman:

1.Don't work in business but on it:  It's true that when your business is in its infancy you have to wear a lot of hats and do everything yourself. Although this is inevitable, your aim should be to delegate as much work as possible.When your business evolves from infancy you should be working on business development   and only manage/supervise day to day activities.In case of Ray Kroc he was working on his product Mcdonald's right from day one. He wanted to make the entire operation as smooth as possible.His first store was his prototype in which every possible details of the  business system was tested.The french fries were left in  the warming bin for no more than seven minutes,frozen meat , patties were all identical in shapes and sizes. Disciple, standardization and order was given the highest priority. He perfected his prototype and then mass produced it through franchising.

2. Hamburger University: Yes you heard it right!  There  is a dedicated university through which Mcdonald's train's its people. Today more than 7,500 students attend hamburger university every year. When started there were only 15 students .

3.Its never too late to start : Ray kroc started Mcdonald's in his early 50's. Before that he had worked as piano teacher, paper cup sales man, milkshake machine salesman. Its never too late to start . In Ray's case his life started at 50(even remarried) .When Ray Korc started , he was able to bring his salesmanship skills with him which enabled him to make Mcdonalds a  successful franchisee.

4.Don't do what everyone else is doing :  When Ray Kroc was thinking of franchising the number one option he had was to go by trade name Franchising which  was famous during his time. But instead he fine tuned the prototype and went ahead with business format franchisee which was the main reason for the success of  Mcdonald's .

5.One size doesn't fit all: This is not directly related to Ray Korc but about how Mcdonald's entered Indian market.Although currently almost 80% of Mcdonald's revenue comes through Business Format franchise, when they entered India in 1995 which was then a developing economy, they partnered with two companies in  a 50:50 Partnership(Master Franchising). Here these two companies ran the entire business. They inturn  formed partnership with commercial space owners . Although this is not how Mcdonald's conventionally franchised, it worked in Indian context.

Please share your feedbacks at rakesh@credosys.in