Read Fast Food Nation: What The All-American Meal is Doing to the World Online
Authors: Eric Schlosser
Fast Food Nation: What The All-American Meal is Doing to the World (13 page)
M
ATTHEW KABONG
glides his ’83 Buick LeSabre through the streets of Pueblo, Colorado, at night, looking for a trailer park called Meadowbrook. Two Little Caesars pizzas and a bag of Crazy Bread sit in the back seat. “Welcome to my office,” he says, reaching down, turning up the radio, playing some mellow rhythm and blues. Kabong was born in Nigeria and raised in Atlanta, Georgia. He studies electrical engineering at a local college, hopes to own a Radio Shack some day, and delivers pizzas for Little Caesars four or five nights a week. He earns the minimum wage, plus a dollar for each delivery, plus tips. On a good night he makes about fifty bucks. We cruise past block after block of humble little houses, whitewashed and stucco, built decades ago, with pickup trucks in the driveways and children’s toys on the lawns. Pueblo is the southernmost city along the Front Range, forty miles from Colorado Springs, but for generations a world apart, largely working class and Latino, a town with steel mills that was never hip like Boulder, bustling like Denver, or aristocratic like Colorado Springs. Nobody ever built a polo field in Pueblo, and snobs up north still call it “the asshole of Colorado.”
We turn a corner and find Meadowbrook. All the trailers look the same, slightly ragged around the edges, lined up in neat rows. Kabong parks the car, and when the radio and the headlights shut off, the street suddenly feels empty and dark. Then somewhere a dog barks, the door of a nearby trailer opens, and light spills onto the gravel driveway. A little white girl with blonde hair, about seven years old, smiles at this big Nigerian bringing pizza, hands him fifteen dollars, takes the food, and tells him to keep the change. Behind her there’s movement in the trailer, a brief glimpse of someone else’s life, a tidy
kitchen, the flickering shadows of a TV. The door closes, and Kabong heads back to the Buick, his office, beneath a huge sky full of stars. He has a $1.76 tip in his pocket, the biggest tip so far tonight.
The wide gulf between Colorado Springs and Pueblo — a long-standing social, cultural, political, and economic division — is starting to narrow. As you drive through the streets of Pueblo, you can feel the change coming, something palpable in the air. During the 1980s, the city’s unemployment rate hovered at about 12 percent, and not much was built. New things now seem to appear every month, new roads around the Pueblo Mall, new movie theaters, a new Applebee’s, an Olive Garden, a Home Depot, a great big Marriott. Subdivisions are creeping south from Colorado Springs along 1–25, turning cattle ranches into street after street of ranch-style homes. Pueblo has not boomed yet; it seems ready, right on the verge, about to become more like the rest.
The Little Caesars where Kabong works is in the Belmont section of town, across the street from a Dunkin’ Donuts, not far from the University of Southern Colorado campus. The small square building the Little Caesars occupies used to house a Godfather’s Pizza and before that, a Dairy Bar. The restaurant has half a dozen brown Formica tables, red brick walls, a gumball machine near the counter, white-and-brown flecked linoleum floors. The place is clean but has not been redecorated for a while. The customers who drop by or call for pizza are college students, ordinary working people, people with large families, and the poor. Little Caesars pizzas are big and inexpensive, often providing enough food for more than one meal.
Five crew members work in the kitchen, putting toppings on pizzas, putting the pizzas in the oven, getting drinks, taking orders over the phone. Julio, a nineteen-year-old kid with two kids of his own, slides a pizza off the old Blodgett oven’s conveyer belt. He makes $6.50 an hour. He enjoys making pizza. The ovens have been automated at Little Caesars and at the other pizza chains, but the pizzas are still handmade. They’re not just pulled out of a freezer. Scott, another driver, waits for his next delivery. He wears a yellow Little Caesars shirt that says, “Think Big!” He’s working here to pay off student loans and the $4,000 debt on his 1988 Jeep. He goes to the University of Southern Colorado and wants to attend law school, then join the FBI. Dave Feamster, the owner of the restaurant, is completely at ease behind the counter, hanging out with his Latino employees and customers — but at the same time seems completely out of place.
Feamster was born and raised in a working-class neighborhood of Detroit. He grew up playing in youth hockey leagues and later attended college in Colorado Springs on an athletic scholarship. He was an All-American during his senior year, a defenseman picked by the Chicago Black Hawks in the college draft. After graduating from Colorado College with a degree in business, Feamster played in the National Hockey League, a childhood dream come true. The Black Hawks reached the playoffs during his first three years on the team, and Feamster got to compete against some of his idols, against Wayne Gretzky and Mark Messier. Feamster was not a big star, but he loved the game, earned a good income, and traveled all over the country; not bad for a blue-collar kid from Detroit.
On March 14, 1984, Feamster was struck from behind by Paul Holmgren during a game with the Minnesota North Stars. Feamster never saw the hit coming and slammed into the boards head first. He felt dazed, but played out the rest of the game. Later, in the shower, his back started to hurt. An x-ray revealed a stress fracture of a bone near the base of his spine. For the next three months Feamster wore a brace that extended from his chest to his waist. The cracked bone didn’t heal. At practice sessions the following autumn, he didn’t feel right. The Black Hawks wanted him to play, but a physician at the Mayo Clinic examined him and said, “If you were my son, I’d say, find another job; move on.” Feamster worked out for hours at the gym every day, trying to strengthen his back. He lived with two other Black Hawk players. Every morning the three of them would eat breakfast together, then his friends would leave for practice, and Feamster would find himself just sitting there at the table.
The Black Hawks never gave him a good-bye handshake or wished him good luck. He wasn’t even invited to the team Christmas party. They paid off the remainder of his contract, and that was it. He floundered for a year, feeling lost. He had a business degree, but had spent most of his time in college playing hockey. He didn’t know anything about business. He enrolled in a course to become a travel agent. He was the only man in a classroom full of eighteen- and nineteen-year-old women. After three weeks, the teacher asked to see him after class. He went to her office, and she said, “What are you doing here? You seem like a sharp guy. This isn’t for you.” He dropped out of travel agent school that day, then drove around aimlessly for hours, listening to Bruce Springsteen and wondering what the hell to do.
At a college reunion in Colorado Springs, an old friend suggested
that Feamster become a Little Caesars franchisee. Feamster had played on youth hockey teams in Detroit with the sons of the company’s founder, Mike Ilitch. He was too embarrassed to call the Ilitch family and ask for help. His friend dialed the phone. Within weeks, Feamster was washing dishes and making pizzas at Little Caesars restaurants in Chicago and Denver. It felt a long, long way from the NHL. Before gaining the chance to own a franchise, he had to spend months learning every aspect of the business. He was trained like any other assistant manager and earned $300 a week. At first he wondered if this was a good idea. The Little Caesars franchise fee was $15,000, almost all the money he had left in the bank.
BECOMING A FRANCHISEE IS
an odd combination of starting your own business and going to work for someone else. At the heart of a franchise agreement is the desire by two parties to make money while avoiding risk. The franchisor wants to expand an existing company without spending its own funds. The franchisee wants to start his or her own business without going it alone and risking everything on a new idea. One provides a brand name, a business plan, expertise, access to equipment and supplies. The other puts up the money and does the work. The relationship has its built-in tensions. The franchisor gives up some control by not wholly owning each operation; the franchisee sacrifices a great deal of independence by having to obey the company’s rules. Everyone’s happy when the profits are rolling in, but when things go wrong the arrangement often degenerates into a mismatched battle for power. The franchisor almost always wins.
Franchising schemes have been around in one form or another since the nineteenth century. In 1898 General Motors lacked the capital to hire salesmen for its new automobiles, so it sold franchises to prospective car dealers, giving them exclusive rights to certain territories. Franchising was an ingenious way to grow a new company in a new industry. “Instead of the company paying the salesmen,” Stan Luxenberg, a franchise historian, explained, “the salesmen would pay the company.” The automobile, soft drink, oil, and motel industries later relied upon franchising for much of their initial growth. But it
was the fast food industry that turned franchising into a business model soon emulated by retail chains throughout the United States.
Franchising enabled the new fast food chains to expand rapidly by raising the hopes and using the money of small investors. Traditional methods of raising capital were not readily available to the founders of these chains, the high school dropouts and drive-in owners who lacked “proper” business credentials. Banks were not eager to invest in this new industry; nor was Wall Street. Dunkin’ Donuts and Kentucky Fried Chicken were among the first chains to start selling franchises. But it was McDonald’s that perfected new franchising techniques, increasing the chain’s size while maintaining strict control of its products.
Ray Kroc’s willingness to be patient, among other things, contributed to McDonald’s success. Other chains demanded a large fee up front, sold off the rights to entire territories, and earned money by selling supplies directly to their franchises. Kroc wasn’t driven by greed; the initial McDonald’s franchising fee was only $950. He seemed much more interested in making a sale than in working out financial details, more eager to expand McDonald’s than to make a quick buck. Indeed, during the late 1950s, McDonald’s franchisees often earned more money than the company’s founder.
After selling many of the first franchises to members of his country club, Kroc decided to recruit people who would operate their own restaurants, instead of wealthy businessmen who viewed McDonald’s as just another investment. Like other charismatic leaders of new faiths, Kroc asked people to give up their former lives and devote themselves fully to McDonald’s. To test the commitment of prospective franchisees, he frequently offered them a restaurant far from their homes and forbade them from engaging in other businesses. New franchisees had to start their lives anew with just one McDonald’s restaurant. Those who contradicted or ignored Kroc’s directives would never get the chance to obtain a second McDonald’s. Although Kroc could be dictatorial, he also listened carefully to his franchisees’ ideas and complaints. Ronald McDonald, the Big Mac, the Egg McMuffin, and the Filet-O-Fish sandwich were all developed by local franchisees. Kroc was an inspiring, paternalistic figure who looked for people with “common sense,” “guts and staying power,” and “a love of hard work.” Becoming a successful McDonald’s franchisee, he noted, didn’t require “any unusual aptitude or intellect.” Most of all, Kroc wanted loyalty
and utter devotion from his franchisees — and in return, he promised to make them rich.
While Kroc traveled the country, spreading the word about Mc-Donald’s, selling new franchises, his business partner, Harry J. Sonneborn, devised an ingenious strategy to ensure the chain’s financial success and provide even more control of its franchisees. Instead of earning money by demanding large royalties or selling supplies, the McDonald’S Corporation became the landlord for nearly all of its American franchisees. It obtained properties and leased them to franchisees with at least a 40 percent markup. Disobeying the McDonald’s Corporation became tantamount to violating the terms of the lease, behavior that could lead to a franchisee’s eviction. Additional rental fees were based on a restaurant’s annual revenues. The new franchising strategy proved enormously profitable for the McDonald’s Corporation. “We are not basically in the food business,” Sonneborn once told a group of Wall Street investors, expressing an unsentimental view of McDonald’s that Kroc never endorsed. “We are in the real estate business. The only reason we sell fifteen cent hamburgers is because they are the greatest producer of revenue from which our tenants can pay us our rent.”
In the 1960s and 1970s McDonald’s was much like the Microsoft of the 1990s, creating scores of new millionaires. During a rough period for the McDonald’s Corporation, when money was still tight, Kroc paid his secretary with stock. June Martino’s 10 percent stake in Mc-Donald’s later allowed her to retire and live comfortably at an oceanfront Palm Beach estate. The wealth attained by Kroc’s secretary vastly exceeded that of the McDonald brothers, who relinquished their claim to 0.5 percent of the chain’s annual revenues in 1961. After taxes, the sale brought Richard and Mac McDonald about $1 million each. Had the brothers held on to their share of the company’s revenues, instead of selling it to Ray Kroc, the income from it would have reached more than $180 million a year.
Kroc’s relationship with the McDonalds had been stormy from the outset. He deeply resented the pair, claiming that while he was doing the hard work — “grinding it out, grunting and sweating like a galley slave” — they were at home, reaping the rewards. His original agreement with the McDonalds gave them a legal right to block any changes in the chain’s operating system. Until 1961 the brothers retained ultimate authority over the restaurants which bore their name, a fact that galled Kroc. He had to borrow $2.7 million to buy out the
McDonalds; Sonneborn secured financing for the deal from a small group of institutional investors headed by Princeton University. As part of the buyout, the McDonald brothers insisted upon keeping their San Bernardino restaurant, birthplace of the chain. “Eventually I opened a McDonald’s across the street from that store, which they had renamed The Big M,” Kroc proudly noted in his memoir, “and it ran them out of business.”
The enormous success of McDonald’s spawned imitators not only in the fast food industry, but throughout America’s retail economy. Franchising proved to be a profitable means of establishing new companies in everything from the auto parts business (Meineke Discount Mufflers) to the weight control business (Jenny Craig International). Some chains grew through franchised outlets; others through company-owned stores; and McDonald’s eventually expanded through both. In the long run, the type of financing used to grow a company proved less crucial than other aspects of the McDonald’s business model: the emphasis on simplicity and uniformity, the ability to replicate the same retail environment at many locations. In 1969, Donald and Doris Fisher decided to open a store in San Francisco that would sell blue jeans the way McDonald’s, Burger King, and KFC sold food. They aimed at the youth market, choosing a name that would appeal to counterculture teens alienated by the “generation gap.” Thirty years later, there were more than seventeen hundred company-owned Gap, GapKids, and babyGap stores in the United States. Among other innovations, Gap Inc. changed how children’s clothing is marketed, adapting its adult fashions to fit toddlers and even infants.
As franchises and chain stores opened across the United States, driving along a retail strip became a shopping experience much like strolling down the aisle of a supermarket. Instead of pulling something off the shelf, you pulled into a driveway. The distinctive architecture of each chain became its packaging, as strictly protected by copyright law as the designs on a box of soap. The McDonald’s Corporation led the way in the standardization of America’s retail environments, rigorously controlling the appearance of its restaurants inside and out. During the late 1960s, McDonald’s began to tear down the restaurants originally designed by Richard McDonald, the buildings with golden arches atop their slanted roofs. The new restaurants had brick walls and mansard roofs. Worried about how customers might react to the switch, the McDonald’s Corporation hired Louis Cheskin — a prominent design consultant and psychologist
to help ease the transition. He argued against completely eliminating the golden arches, claiming they had great Freudian importance in the subconscious mind of consumers. According to Cheskin, the golden arches resembled a pair of large breasts: “mother McDonald’s breasts.” It made little sense to lose the appeal of that universal, and yet somehow all-American, symbolism. The company followed Cheskin’s advice and retained the golden arches, using them to form the
M
in McDonald’s.