How did McDonald's Burger conquer the fast-food indistry ?

Source: www.ibisworld.com

McDonald's is a real-estate business that might sound surprising after oh who hasn't at least once in their lifetime indulged in the glorious experience that is a happy meal. You might know McDonald's as that has to change that sells hamburgers and fries but trust me it goes way deeper than that.

That's why be looking at the world's second largest restaurant chain McDonald' .

Few things sound as Irish as the name McDonald. It is an interesting name the Mac part means son while Donald comes from a Gaelic name that means Ruler of the World.

Very ominous right! The two world rulers that we are interested in are Richard and Maurice McDonald, two brothers from New Hampshire in the 1920s they moved to California where they started a movie theater and a hot dog stand. But they eventually went bust when the Great Depression came around their first big success came in 1940 when they opened the barbecue joint in San Bernardino.

Now adds time virtually all restaurants were mom-and-pop establishments with their own unique tastes and cooking lessons, drive-ins with roller-skating waitresses were all the rage back then but they weren't particularly efficient. You had to wait half an hour to get your order and half of the time they got it wrong . 

The McDonald's barbecue was no different and although it did turn a profit, the brothers knew they could do better. They realized that most of their income was coming from just three products hamburgers, french fries and coke. And after running the place for eight years the brothers decided to make a radical makeover.

They dropped most of their menu to focus on their bestsellers and then they redesigned the entire kitchen around that.

The cooking process started to look like an assembly line which allowed the brothers to fill customer orders in as little as 30 seconds.

They abandoned the drive-in concept in favour of a walk-up counter and they stopped using cutlery and dishes entirely replacing them with disposable packaging in an instant their restaurant became a sensation drawing an attention from across the country.

One of the people they attracted was this guy Ray Kroc. He was a natural-born hustler who at the age of 15 had lied his way into serving as a Red Cross ambulance driver during World War one.

Interestingly enough he served alongside Walt Disney in France but they didn't really keep in touch after the war. Like most people from the post-war years Ray had worked dozens of job. Jazz pianists, radio DJ, paper cup salesman you name it.

In the early 1950s, he was traveling cross-country trying to sell expensive milkshake machines. But he wasn't really doing a good job at.

One day in 1954, however he got an order for eight of them and it was from none other than the McDonald brothers.

When Ray made his way to San Bernardino he fell in love with their restaurants and immediately offered to franchise it. By that point the McDonald brothers had already opened over 20 franchise locations but none of them were doing as well as the original restaurant.

The lack of oversight made maintaining quality impossible.

The brothers decided to give ray of shots and boy did he deliver. he can't picked only the best franchisees and ran his operations like an army drill. In the span of just six years Ray built 

100 McDonald's restaurants. While the McDonald brothers were basically managing their own joint.

Ray eventually grew tired of them. They'd reaped 0.5 percent of all sales for doing nothing while road blocking race suggestions for improving the franchise. To cut them out Ray figured out a brilliant strategy, he'd buy the land of all future restaurants would be built upon and then he'd lease it to his franchisees. This way Ray got to keep almost all of the profits from the business while leaving the McDonald brothers empty-handed.

Of course the brothers weren't very happy at that but there wasn't anything they could do and in 1961 they finally agreed to sell their franchise to Ray for $2.7 million dollars. With the brothers out of the way Ray stepped on the accelerator implementing all the changes he had wanted like redoing the logo and creating a mascot he also expanded the menu adding the filet-o-fish in 1965 and the Big Mac in 1968.

That same year Ray celebrated opening store number 1000 ,and adopted the modern iteration of the golden arches logo. Throughout the next decade McDonald's would keep expanding and not just in the US. They pioneered breakfast fast food with the introduction of the Egg McMuffin in 1972.

They added stuff like Chicken McNuggets and the Happy Meal which would eventually make them the world's largest toy distributor. By 1988 they have 10,000  restaurants and although Ray was no longer alive the company kept on growing without him. Thanks to their iconic hamburger University.

The McDonald's franchise had some of the best trained managers in the fast-food industry This allowed them to stay one step ahead of competitors like Burger King and Wendy's.

Since then McDonald's have continued expanding their menu into what we know today.

In 2006 two franchisee underwent its first major redesign since the 1970s adopting the so-called Forever Young design which features comfortable sofas and armchairs.

Interestingly enough, today McDonald's isn't the world's largest restaurant chain. That title goes to Subway who have almost 44,852 locations compared to 37,000 for McDonald's.

If the company itself owns only  15% of them the rest being franchised out. The restaurants ran by the company account for two-thirds of its revenue but that's not the whole story.

In reality it costs way more to run your own restaurant than it does to sit back and collect rent In 2014 for example company operated stores generated $18.2 billion. But McDonald's got to keep only $2.9 billion.

In comparison out of the $9.2 billion coming in from franchisees the company kept 7.6 stunning 80 percent. So even though McDonald's seems to be flipping burgers in reality they're playing monopoly instead.

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