Fifties (26 page)

ELEVEN

T
WO BROTHERS, WHO, IN
the beginning, failed at almost everything they did, were among the first to understand that the fundamental changes taking place in American society concerning where people lived and worked would also affect how they ate. It was then that the luck of Dick and Maurice (Mac) MacDonald took a startling turn for the better. The McDonald brothers moved to California from their native New Hampshire in 1930, driven by the grim economy that had forced textile and shoe factories to close throughout the Northeast. They tried various odd jobs on the periphery of the movie industry, with no notable success: “We were both pushing lights around the Columbia studio and it became very clear to both of us after a few years that no one was going to take the McDonald brothers aside and make us producers,” Dick McDonald remembered. They had never liked working for
large companies and had often talked of running a place of their own. They had good reason to distrust big companies: their father, Pat McDonald, had worked in a shoe factory in Manchester, New Hampshire, for forty-two years in an age when there were no pensions or vacations. In his last year he was called in by his boss and told, “Pat, I think you’ve outlived your usefulness to us. We think we’ve had your best years. I’m afraid we don’t need you here anymore.”

At the height of the Depression, the brothers opened a small movie theater, but it quickly went bust. As far as they could tell, the only business making money at the time was a nearby hot-dog stand run by a man named Walker Wiley. So in 1937 they opened a stand near the Santa Anita racetrack; they did well from the start, but when the racing season ended, business would dry up.

Finally, Mac McDonald decided they should build a bigger place in San Bernardino, a growing blue-collar city of perhaps 100,000 people. “We weren’t going to sell to the country club set,” noted Dick McDonald. The problem was financing: It was going to take $7,500, they estimated. They approached various banks, only to be asked again and again how much collateral they had. Collateral? thought Dick McDonald. All we have is our smiles. Finally, in desperation, they went to the one they were sure would turn them down, because it was so big: the Bank of America. Unlike the others, S. P. Bagley, the manager, listened carefully and asked them to come back in a week so that he could take their proposal to the bank’s finance committee. A week later they nervously reappeared. The finance committee, he reported, was far from enthusiastic, “but sometimes I like to play a hunch, and I have a hunch that McDonald’s is going to make it and make it big,” he said. “I can’t give you the full $7,500, but what about a loan of $5,000?” So it was in 1940 they opened a small drive-in restaurant in San Bernardino.

Somewhat to their own surprise, they were an immediate hit and were soon making a profit of $40,000 a year. Their customers came in two varieties, they decided: teenage boys, with their first patched-up used cars, who liked the place as a hangout to flirt with the cute carhops, and young families, in which sometimes both parents worked, who ate there because it was relatively fast and cheap. Obviously, the brothers wanted to encourage the second group and discourage the first.

The McDonalds figured they needed even greater speed. On the average, customers had to wait some twenty minutes for their food. “My God, the carhops were slow,” remembered Dick McDonald.
“We’d say to ourselves there had to be a faster way. The cars were jamming up the lot. Customers weren’t demanding it, but our intuition told us they would like speed. Everything was moving faster. The supermarkets and dime stores had already converted to self-service, and it was obvious the future of drive-ins was self-service.”

The McDonalds had understood an important new trend in American life: Americans were becoming ever more mobile and living farther from their workplaces than ever before. As they commuted considerable distances, they had less time and always seemed to be in a rush. Life in America was surging ahead and one of the main casualties was old-fashioned personal service. Their customers wanted to eat quickly.

Therefore, the brothers began to look for the weaknesses in their operation that caused the delays. Obviously, the carhops would have to go, but to their surprise the McDonalds discovered another impediment to faster service as well: Their menu was surprisingly large, including hamburgers, hot dogs, barbecue, and all manner of sandwiches. However, when the McDonalds checked their receipts, they found that 80 percent of their sales consisted of hamburgers. “The more we hammered away at the barbecue business, the more hamburgers we sold,” Dick McDonald said later. So they decided to get rid of the labor-intensive barbecue and sandwiches and narrow the menu to the venerable American hamburger. That would allow them to mechanize the food-preparation process as well.

They did not realize it until much later—during those years they had little time for such reflection—but they had caught the crest of an important new phenomenon: American life was speeding up significantly; the nature of the American family was changing, and so was the family dinner.

Suddenly, the McDonalds found themselves blossoming as brilliant innovators in the one thing they knew: fast food. In the fall of 1948 they closed down for several months, fired all their carhops, and began to reinvent the process. They replaced their small three-foot cast-iron grill with two stainless-steel six-footers; the new grills were custom-designed, and the stainless steel was not only easier to clean, it held the heat better (if they had put too many hamburgers on the cast-iron grill, it lost heat). They replaced the plates and silverware, which had a tendency to disappear anyway, with paper bags, wrappers, and paper cups. That eliminated the need for the dishwasher. They cut the menu from twenty-five items to nine, featuring hamburgers and cheeseburgers, and they made the burgers a little smaller—ten hamburgers from one pound of meat instead of eight.
The McDonalds, rather than their customers, chose the condiments: ketchup, mustard, onions, and two pickles (condiment stations had always been an eyesore, as far as they were concerned—slopped ketchup was everywhere). The McDonalds decided they wanted a machine to make their patties. Dick pondered the question and then figured out that a candy company that made peppermint patties must have just the right device. Posing as a free-lance writer, he visited a number of candy companies, asking how they made their patties so perfect every time, until he finally found a small machine, where a worker, by pushing one lever, could deliver just the right amount of mix. The same machine could make hamburger patties.

Under the new system, if a customer wanted something different on his hamburger, he faced a major delay in service. The McDonalds believed choices meant delays and chaos. After some experimentation—regular heat lamps had failed—they figured out that they could keep the hamburgers hot with infrared lights. “Our whole concept was based on speed, lower prices, and volume,” Dick McDonald said. In front of the drive-in they erected a sign with a chef whose name was Speedy.
MCDONALD’S FAMOUS HAMBURGERS
, said the sign,
BUY ’M BY THE BAG
. And larger than the letters of the name was the price: 15
CENTS
.

To the McDonalds’ surprise, business fell off at first. Deprived of their trysting spot, some of the old carhops and teenage boys came back and heckled them. For a time the McDonalds had to tell employees to park their cars in the parking lot so that it would look like they always had a few customers. But as the McDonalds added milkshakes and french fries, they began to be more successful than ever. By 1950, the teenagers had departed to more tolerant hangouts and were replaced by working-class families, who, thanks to the McDonalds’ low prices, could afford to feed their families restaurant meals for the first time. The kitchen was enclosed by glass, and children liked watching the burgers cooking on the stainless-steel grills. The children were seen as important from the beginning, and the word was put out that the staff was to be very nice to kids, because kids came equipped with parents.

What the McDonald brothers were doing with food was, as John Love pointed out, what Henry Ford had done to automobile manufacturing (and what Bill Levitt had done with housing): They turned their kitchen into an assembly line. Because they were pioneers, they had to invent much of their own kitchen equipment. In this they were greatly aided by Ed Toman, a local friend who had a small machine-tool shop and no previous experience in the world of
food, save inventing a small device to grind orange peels for marmalade. His San Bernardino shop was primitive, with no air-conditioning; the heat seemed to overwhelm all but Toman. He helped design the lazy Susan (stainless steel, of course) on which to prepare two dozen hamburger buns with condiments; a larger, stronger stainless-steel spatula; and the one-squeeze stainless-steel pump that shot just the right amount of mustard or ketchup onto the burger and which, John Love noted, Toman failed to patent, thus costing him a chance to be a millionaire.

Inside the kitchen, everything was mechanized: There were three grill men, who did nothing but cook patties; two milkshake men; two french-fries men; two dressers (who wrapped the hamburgers); and out front were three countermen, who took the orders. Much of the food was preassembled; the slack time between the rush hours was used to prepare for the next onslaught.

Here was the perfect restaurant for a new America, and it was a smashing success. There were long lines at rush hour, and by 1951, the gross annual receipts were $277,000, some 40 percent higher than in the old premechanized days. By the mid-fifties, the brothers were sharing profits of $100,000 a year, a dazzling figure for men selling items that cost fifteen cents apiece. Soon all kinds of would-be competitors were studying them, trying to figure out how to repeat their formula for success. In 1952 they were on the cover of
American Restaurant
magazine. From then on, they were deluged with mail—as many as three hundred letters a month—asking them how they had done it. When aspiring entrepreneurs introduced themselves to the brothers, they were uncommonly generous in sharing expertise.

In 1952 James Collins, later the largest Kentucky Fried Chicken franchiser and the head of Sizzler restaurants, was a young man just setting out to start his own coffee shop. But hearing of the success of the McDonald brothers, he decided to drive out to San Bernardino to see for himself. He arrived just as the lunch crowd descended. “I have never seen anything as breathtaking since then,” he said later. “There was a line of people halfway out to the curb and the parking lot was full. There was nothing else like it. They had two hamburger lines and they were handling people every ten seconds. I tore up my coffee shop plans and entered the hamburger business, and except for the fact that I sold hamburgers for 19 cents, everything else was the same as McDonald’s.”

In fact, so many people were making the trek to their little hamburger stand that the McDonalds knew sooner or later they would have to franchise the operation. In 1952, they reluctantly sold their
first franchise rights. In truth they were already content with their lives and saw no reason to expand—they were making more money than they had dreamed of, they had lovely houses with tennis courts, new Cadillacs every year. Neither had children and therefore there were no thoughts of leaving a financial empire to their heirs. They thought of McDonald’s as a one-shot operation, and they had little interest in a great national network of hamburger stands bearing their name.

The first franchise went for a one-time fee of a thousand dollars. They were surprised when the franchiser, Neil Fox, an independent gas retailer in Phoenix, wanted to keep their name on his stand. “What the hell for?” asked Dick McDonald. “McDonald’s means nothing in Phoenix.” The Carnation company studied their success and was so impressed it offered to take them national on a major scale: They would start in San Francisco, sweep down the California coast, and then move eastward across the country. That sounded like the fast track, and the brothers wanted no part of it. “We are going to be on the road all the time in motels, looking for locations, finding managers. I can just see one hell of a headache if we go into that kind of chain,” Maurice McDonald told his brother.

Years later, after the McDonald brothers had sold out for far less than they might have, someone asked Dick McDonald if he had any regrets. Not at all, he answered: “I would have wound up in some skyscraper somewhere with about four ulcers and eight tax attorneys trying to figure out how to pay all my income tax.”

If the McDonald brothers knew their limits, then Ray Kroc was a man who had always seen his future as limitless. He was the classic American boomer, a self-made man, a high school dropout. He was suspicious of college graduates because he thought college tended to separate businessmen from the very people with whom they would have to deal, and, worse, it tended to make them a little lazy. As he turned into the populist as business tycoon, he became convinced that business schools made their students arrogant, and for a long time McDonald’s was conspicuous for its lack of MBAs. Kroc believed in himself and his special vision of the American dream: If he only kept trying, surely one day lightning would strike and he would become rich and successful.

As a young man, Kroc held a variety of jobs, selling, among other things, paper cups and Florida real estate, and playing piano for bands when things got really tight. His drive was incredible, and he was always spurred by the fact that his father, a successful Western
Union operator, had become rich speculating in land in the twenties and then had lost everything in the Depression. On the day of the senior Kroc’s death his desk contained his last paycheck from the telegraph company and a garnishment notice for the amount of his wages. If there ever was a businessman with the instincts of the common man, it was Ray Kroc. He boasted, with good reason, of his ability to anticipate mass taste, and he was rarely wrong (although briefly there was an unfortunate sandwich put out by McDonald’s called the Hulaburger, which Ray Kroc loved and which featured two slices of cheese and a piece of grilled pineapple).