20 Business Lessons From The Founder: Story of McDonald's
The Founder, starring Michael Keeton is the true story behind the inception of the world’s largest fast food restaurant chain, McDonald’s. Knowing the magnitude of this business, I knew there would be an incredible amount of lessons worth noting and sharing.
See below for 20 lessons business owners can take away from the Netflix movie, The Founder.
🍔 “Supply first demand second” - not my words, but the words of Ray Kroc who drove the predominant success of McDonalds.
These are not my words nor are they the order of my view but unfortunately I see so many businesses invest in the supply of their goods before they build demand.
Demand comes and should come first.
Supply comes second.
Please don’t live by “build it and they will come” - you can ask many failed businesses if they lived by this motto.
🍔 Proven concept made better - The McDonald’s brothers took an already proven idea and made it better.
Who said you have to be unique from inception of your business, you’re clearly not driving the first concept of the car, or the first concept of the phone.
Find the gaps in existing things and make them better because if you’re feeling frustrated about something not being quite how you’d like it, you can guarantee that others are too.
🍔 Pareto Principle - The McDonald’s brothers found that 85% of their business came from 3/27 products, so they culled the majority and only sold fries, burgers and drinks.
Do you know which of your products, services and your time is delivering you the greatest ROI? Find out what it is and eliminate the unnecessary, because it's unnecessary.
🍔 Demographic - Instead of a drive through, in this era they had a drive up where you park your car out the front of the restaurant and the staff would come to you. The McDonald’s brothers, although noting it worked, didn’t want to service this demographic of people (young teens, “hooligans” as they put it) - they wanted to target families.
If you’re attracting the wrong demographic, it could be your marketing but it could also be the way at which you operate... you could be on the wrong social media platform or you could be hiring the wrong sales person who only gels with a certain demographic.
🍔 Unique selling point - The layout of the McDonald’s kitchen was integral because that led to their USP of speedy service. They intensively role-played and sketched out in life size what this looked like - literally drew a floor plan in chalk on a tennis court where the sauce would be spread and the fries cooked - and they kept tweaking it until it was just right.
In other words, they tested and looked for flaws in their operation. If what you’re doing isn’t working, have you tested it enough and also adapted and adapted again to find ways about it? Whether that is looking at the order of things, further training, investing in equipment or software that performs better and eliminates human labour.
🍔 Shifting behaviors - The McDonald’s brothers decided to adapt from the “Drive Up” concept to a “Walk Up” concept (meaning you walk to the counter yourself) - they wanted to do this for several reasons, there were a lot of flaws in the Drive Up, the main ones being slow serve time which impacted the customer experiences, and also the demographic of people it attracted (the said, “hooligans) - but when they made this shift with the concept, it was ‘new’ and the behaviors of people didn’t appreciate or adopt this change.
Originally this shift in concept seemed to be a ‘bad idea’ by the McDonald’s brothers, but could there such thing as a bad idea? Could it be that the ‘idea’ just hasn’t been tested and directed enough until proven?
Sometimes in business, the solution we propose, although a better method, takes some convincing of our target market to adopt. This responsibility lies on the business to showcase this new concept by demonstration and also conveying the benefits of the change.
🍔 “30 years to an overnight sensation”, or so it appears. You’ve heard a million times before, an overnight success that was 10, 20, 30 years in the making. In the case of McDonald’s, it took the right person to step in and drive the success or the sensation.
One quote I’ve stood by as a Business & Marketing Consultant is: “you can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere”.
I see this time and time again, incredible businesses, incredible ideas, incredible solutions - but minimal success, why? Because that’s only one piece of the puzzle; marketing, mindset, strategy and sales - it’s the core four that I live by and help clients to establish to garner success.
🍔 Failed Franchise - One failed attempt at franchising kept the McDonald’s brothers from franchising again. They shared something I agree with, they would rather “one great restaurant instead of 50 mediocore ones” - mediocre being my least favourite word!
But this is what was in the way… it’s not that they failed at franchising the first time, it’s that they refused to find out what went wrong, adapt and try again. Another thing too, one of the brothers was incredibly passionate about the bigger vision of McDonald’s but he almost let his fear of failure stop him, until Ray Kroc came in and helped execute the plan.
🍔 Branding of the Golden Arches - Ray Kroc was really an incredible visionary, as much as you may have had otherwise thoughts about his character in The Founder. He saw the identity the Golden Arches brought with it for the McDonald’s brand and how it became an icon that was recognisable and synonymous with their company.
Having a core branding icon, whether it’s the Golden Arches by McDonalds, the tick by Nike or the apple with Apple - one small identification of a brand speaks more than a thousand words, once you create an identity to match it.
🍔 Vision - Know where you are headed. There was a two folded vision in The Founder and the story of McDonald’s. The vision of the brothers, which was very wholesome, around quality and the McDonald’s speedy experience - and then also the vision of Ray Kroc which was around expansion, business growth and profitability.
Vision is an integral part of business, but it’s not something that needs to be 100% clearly defined from day 0. An idea and direction of the vision at the core is important, but the clarity of the vision comes from execution. The McDonald’s brothers had no idea that part of their vision would be to one day be national and international, but the core of their vision remained the same - wholesome food for families.
🍔 Burn the boats - This is something Tony Robbins talks about and it was something that came to mind straight away when Ray Kroc decided to mortgage his house as backing to further fund the McDonald’s chain. Nothing puts you on the line or on edge more than potentially sacrificing the roof over your head.
I wouldn’t personally encourage people to go to that extreme, although it worked out for Janine Allis of Boost Juice, but I have seen massive growth in myself and my clients when you ‘burn the boats’ and make no choice but to succeed, know the feeling?
🍔 Deals on the golf course - Rapid expansion of the McDonald’s franchises started to begin, and really took off, even when playing rounds of golf Ray Kroc was signing deals in-between each hole.
I’ve heard before that Richard Branson once said, to make more deals and earn more money, throw more parties.
Sometimes in business, the business is a by-product of hanging out with the right people, having a good time and also having them know what you do. Sounds like a triple shot of success to me…
🍔 Maintaining standard - The McDonald’s brothers began to worry over maintaining standard when they were opening a minimum of x3 franchises per month. True to their business and not overly impressed with profits, they were most concerned with what all businesses should be concerned with, and that’s the customer.
If you look at the McDonald’s of today as we go into 2020, they are all extremely systematised. They have the same menu, the same order of what they say, the same end to end process - and this is what helps to maintain standards in any business.
If you’re interested in maintaining systems in your business, I’d recommend reading the E-Myth Revisited by Michael Gerber, it’s the #1 book I give to clients and a stock standard for every business owner to own and read, and of course, implement!
🍔 The right fit - The demographic of the customer is extremely important and something the McDonald’s brothers were adamant about. But as they expanded, the demographic of the franchise owners was integral too, in an attempt to maintain quality assurance amongst other aspects. They identified husband-wife couples to be the perfect candidate as franchise owners as they embodied the brand.
In your business, yes think about your target market demographic, but also keep a keen eye on your company culture and other stakeholders in your business that would impact the vision, quality assurance and output of your business.
🍔 1:1 to 1:many - Franchising became the soul of McDonald’s and as much as a Gary-Vee style hustler Ray Kroc was, he was limited by 1:1 conversations to pitch franchise opportunities to couples. He then began putting small seminars and talks together which allowed him to have the same conversation, but impact many, many more people, have a higher conversion (as with 1:1 you are bound by a ceiling), so scalability in this aspect was considered.
You don’t only need to go from 1:1 to 1:many with your service offering, you can also look to your suppliers, potential franchisees, sales opportunities and many other aspects to reach more people. I would encourage you to maintain quality assurance in this aspect too, and don’t see the 1:many audience as just numbers, but keep a personal relationship with them, which could include a follow-up call or a nurture strategy after-the-fact.
🍔 Break even point - Then came the day where Ray Kroc realised he was barely breaking even. How can an uber-successful business not be producing sizable profit?
I’m sorry, but this happens more often than people like to admit. There are businesses turning over millions of dollars in revenue, but also in another turn, turning over millions in expenses. It’s a lesson to take note of your numbers and speak to someone who can actually advise you on this. But at the very least, understand your incomings, outgoings and build your salary into your expenses otherwise you’ll wake up in your accountants office with zero coinage.
🍔 Expense reduction - Expenses and overheads are high in all hospitality businesses, especially when at the time they were charging a mere .30 cents for a meal. Ray Kroc identified that the biggest expense in the business was the freezer for the ice-cream, here’s where the innovation came… Industrialisation of ice-cream in a powdered form which meant no need for freezers.
I will say this, I’m not a fan of industrialised food and food that is not real wholefood. But, in your business, there could be ways to innovate to reduce expenses and grow profits. It could be products, suppliers, elimination, addition, staff - and if there is no room to move down, could your prices increase and that of your marketing positioning to reach a more affluent customer?
🍔 The REAL business - McDonald’s is clearly a business that sells burgers, but the epiphany came when the real business was revealed… The identification that the business they are in is real estate. When profit margins became tough, creative ideas emerged, and creative also means simple, lease the lot of land to the franchisees as another avenue for income in the business.
Don’t look at your business merely laterally or black and white, there are a million assets within your business that will allow you to further monetise. It’s not just the transactional item you sell for profits. I love having conversations around this and re-creating business models to allow for further income streams in a business, if you’d like to do so, chat to me… but I will say a huge emerging market now is the education space, taking what you know as an expert and creating a course or digital product around it.
🍔 When opportunities arise - Ray Kroc was a man of hunger and opportunity, at least what I saw of him in The Founder, so once the identification of the property game emerged, he took it as a chance to grow his own profits and company, as he was limited by his earning capacity within his agreement with the McDonald brothers…
Interesting though, they say don’t grow a house on someone else's land. Ray Kroc grew the McDonald’s business, even though it wasn’t his. The franchisees also grew their restaurants on land that wasn't theirs.
They say the same thing about marketing, it’s rented property if it’s not your own - think social media… you don’t own Facebook, and they’ve shown this to the B2B market with pay to play i.e. Facebook Ads.
🍔 Fortune favours the bold - There were many gambles and leaps of courage Ray Kroc took throughout his life as a salesman, and then that of leading the growth of McDonald’s, and his fortune followed.
Courage and fast decisions are what allow people unprecedented success. Live by the motto of fail fast and learn fast. Your business can remain standing as a legacy long after your life has been lived, but only if you choose to take the risks along the way.
🍔 Mind the company you keep - There was animosity that emerged between the McDonald’s brothers and Ray Kroc and although there were contracts in place, the brothers pulled the short straw. Ray Kroc ended up buying them out and ensured they removed any association to the McDonald’s brand.
Not being a lawyer myself I can only provide my suggestions on this front, but in business, you have to build trust with the people you associate yourself with but always ‘hold your own’. Don’t turn a blind eye to any red flag and don’t remove your finger from the pulse at any point - a lesson I’ve learnt myself, which has allowed me to be a stronger business owner today.
🍔 Persistence - “1600 restaurants, 50 states, 5 foreign countries and an annual revenue of $700 million”, and it was all built on persistence, in the words of Ray Kroc (these numbers were accurate in The Founder movie, and have absolutely increased since).
Persistence will take you places, I’m adamant about that. For me personally, I say I’m the most optimistic persistent person you will ever meet. It’s like they say, don’t change the goal change the plan, and this is extremely true in business.
🍔 Unsuccessful men with talent - Ray Kroc said there are plenty of these around… sad but true.
You never want to be a ‘could’ve or should’ve been’. It’s not talent that we need to keep perfecting, which is why my clients love to work with me because I make them use the talent they have. It’s about taking what you have, sharing that with the world, and through doing so your talent will be strengthened.
🍔 Creating the next McDonald’s - It’s hard to say if your business will be the next McDonald’s but it could happen, I really believe it. The Uber’s of today. The Air BnB’s of today. The Netflix of today. Do you think the founders of these ever envisioned their incredible success?
I will say this first about cliche’s before announcing the cliche - cliche’s have definition behind it, they’re not that fly by the night saying that sounds good in the moment… Now for the cliche:
You won’t know unless you try - but I will add, you won’t know unless you do.
The Founder is a must-watch for any entrepreneur or business owner and as you watch, keep your business-brain active and take notes as it applies to your business.
As a business and marketing consultant, Shannon helps businesses in a multi-faceted approach - helping them to achieve their business goals through strategic guidance and mentorship. If you’d like to discuss how she can help your business grow, apply for a complimentary Strategy Session here.
