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.

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