If Ray Kroc ran a symbol group, what might it look like

There are three reasons to read Grinding It Out by Ray Kroc, who developed the world’s best fast food franchise, McDonald’s.

The first is to understand how great salesmen work. The second is to understand how to lead and develop a great business. The third, and the one which this review will dwell on, is to understand how a good franchise should work.

While there is a difference between a franchise and a symbol group, there are a great many independent retailers in the UK considering some sort of tie up with a wholesaler or buying group to propel their business forward. Kroc’s thoughts provide a useful benchmark to compare what is on offer.

“There is a basic conflict in trying to treat a man as a partner on the one hand while selling him something at a profit on the other,” says Kroc.

When setting up the McDonald’s franchise system, he decided that it would not supply its operators. This was because he believed that once in the supply business, he would become more concerned on the sales he was making to his franchisee rather than with “how his sales are doing”.

A second key idea was that McDonalds would be a restaurant system that would be known for food of consistently high quality and uniform methods of preparation. “Our aim, of course was to insure repeat business based on the system’s reputation rather than on the quality of a single store or operator.”

The basics of good service had to be “stressed over and over.” Kroc was always reminding everyone of QSC and V: quality, service, cleanliness and value.

In the 1970s when Kroc wrote the book, a prospective franchisee had to pass an interview and work evenings or weekends in a local McDonald’s store. Only then would he be able to put down a $4,000 deposit to join the two year waiting list for a site. And once the site was agreed, Kroc would ask them to work another 500 hours in a restaurant before attending an advanced training course.

In exchange for 11.5% of their gross sales, the franchisee would get product development, marketing advice, training, national advertising and continued supervision. “I think it’s a hell of a bargain,” Kroc remarks.

When McDonald’s opened up in downtown Chicago, Kroc was delighted as he knew every worthwhile location in the city from his work as a salesman before he took on fast food.

“If you’re sincere about serving your customer better, you learn the layout of his basement, what kind of alley access he has, and so forth. You might be able to suggest a better way for him to handle his stock or deliveries. That’s what I always did and now it’s paying off for me in detailed knowledge that helps McDonald’s.”

While property deals initially propelled the corporation forward, Kroc stressed that he was in the hamburger business. His book shows his focus on creating great value for others. It has more meat in it than a Big Mac and is even better value. Some of his values may have dated but this book is packed full of energy and ideas. Enjoy.

For more, see www.betterretailing.com.

Digital disruption in the UK wholesale space

“Twenty years ago I was driving boxes to the post office in my Chevy Blazer and dreaming of a forklift,” says Jeff Bezos in his most recent letter to shareholders. A blink later and he points out that the company has grown from 30,000 employees in 2010 to 230,000 now. But his ambition is the same. “We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness and risk-acceptance mentality that is normally associated with entrepreneurial start-ups.” Amazon is great at disruption because of its customers focus and the fact that the internet means it needs none (or very few) people between its warehouses and the shopper. The threat of Prime, its membership service, is the biggest challenge facing the UK retail market and the wholesale market by extension. It is both a direct threat and an indirect threat in that is inspiring countless numbers of othe...

Five things to learn from Waitrose

Interim results from Waitrose this week confirm the industry figures that show the upmarket supermarkets and convenience stores are leading the market (albeit from a 4.2% share according to Kantar Worldpanel). Charlie Mayfield, the chairman, highlights many reasons for its success and here are five that local retailers should consider. Marketing works. Waitrose claims that more than 370,000 extra customer transactions resulted from its spring tie-up with Delia Smith and Heston Blumenthal in the first eight weeks. This autumn, it launches a cookery school. Engaged shoppers are more profitable shoppers! You need a value offering. 17 per cent of Waitrose sales are from its value range, called essentials. Momentum works. Its strategy is to bring Waitrose to more people in more places. It invested in 75,000 square feet of extra selling space in the first half of this year, including three convenience stores. In the second half of the year, it is adding eight convenience stores. Str...

The secrets of persuasion: No short cuts.

The best moment in my interview with Terri Sjodin, who teaches many of the world’s top corporations how to sell persuasively, is when she smiles at me and asks to hear my “elevator speech". My mind literally goes blank. The author of Small Message, Big Impact , her new book on how to craft powerful messages that persuade people to listen to you, has thrown the gauntlet at me. There was nowhere to hide. I had just told her how I had used her book to write out my three minute speech to open the Local Shop Summit. She listened patiently to my pitch, thought for a moment, and said: “I bet you had an illustration in your mind of an independent who really capitalised on your ideas and has taken them to the bank.” I could swear she was reading my mind. I blushed and nodded. “So you should open with this story,” she said. “Start out by saying: ‘Let me open the conference by telling you a great story with a happy ending.’ So the audience will say to themselves: ‘He is goi...

nickshanagher

Search This Blog