The Burger That Conquered the Country

The destiny of nations depends on the manner in which they nourish themselves.

-- The Physiology of Taste, Jean Brillat-Savarin ( 1 826)

If so, America's destiny manifestly depends to no small degree on the ham burgers, French fries and milkshakes served beneath the golden arches of Mc Donald's. Last year the chain of drive-ins and restaurants rang up sales of $1.03 billion, passing the U.S. Army ( 1972 food volume: $909 million) as the nation's biggest dispenser of meals.

Now the chain is going on to new triumphs: adding an average of one new outlet every day to its 2,500 in the U.S., and hanging on every one a sign reading OVER 12 BILLION SOLD to commemorate an event that occurred during August. Executives at world headquarters in Oak Brook, Ill., a Chicago suburb, have not bothered to investigate who ate the 12 billionth hamburger, when or in which restaurant, because they know that its consumption constituted only an ephemeral milestone. In four months or less, given the current intensity of the nation's hamburger hunger, those signs will be replaced by new ones proclaiming OVER 13 BILLION . . .

Nonstop Munching. McDonald's statistical accomplishments are staggering. To illustrate: if all the 12 billion McDonald's hamburgers sold to date were to be stacked into one pile, they would form a pyramid 783 times the size of the one erected by Snefru. If a man ate a McDonald's hamburger every five minutes, it would take him 114,000 years of nonstop munching to consume 12 billion burgers. If all the cattle that have ever laid down their lives for McDonald's were to be resurrected for a reunion, they would stand flank-by-jowl over an area larger than Greater London.

Statistics alone cannot adequately measure the impact of McDonald's on U.S. life. The company's relentless advertising campaign ($50 million budgeted this year) has made the McDonald's jingle, You Deserve a Break Today, almost as familiar as The Star-Spangled Banner. But the chain's managers have wrought their greatest achievement by taking a familiar American institution, the greasy-spoon hamburger joint, and transforming it into a totally different though no less quintessentially American operation: a computerized, standardized, premeasured, superclean production machine efficient enough to give even the chiefs of General Motors food for thought. In the $8 billion-a year fast-food industry, McDonald's is only one of dozens of chains that strive for uniformity in menu and service. But none has ever surpassed McDonald's in automating the ancient art of cooking and serving food.

At every McDonald's outlet, winking lights on the grills tell the counterman exactly when to flip over the hamburgers. Once done, the burgers can be held under infra-red warming lights for up to ten minutes, no more; after that, any burgers that have not been ordered must be thrown away. Cybernetic deep fryers continuously adjust to the moisture in every potato stick to make sure that French fries come out with a uniform degree of brownness; specially designed scoops make it almost physically impossible for a counterman to stuff more or fewer French fries into a paper bag than headquarters specifies for a single order.

Customers get almost as little discretion as the help; their burgers come wrapped, with ketchup and mustard applied in precise, premeasured splats. A rugged individualist can order his burger "without," but he will have to discover that concession on his own; McDonald's does not advertise it. One sandwich is unalterable: the Big Mac, a double burger whose interstices are occupied by alternating dollops of onions, pickle chips, cheese, lettuce shreds and a "special sauce," the formula for which is guarded like an atomic secret (see diagram next page).

Machinery and equipment cannot do everything, of course. Human beings are involved too--some 130,000 employees in nine countries, from Western Europe to Japan and Australia. McDonald's has grown from a uniquely American to a truly global operation, and it faces some special problems in making employee performance uniform. The company operates directly only some 750 of its 2,500 restaurants; the rest are run by holders of McDonald's franchises (the firm prefers to call them licenses). The hired help are mostly youths who work at a McDonald's for a few months and then quit; turnover in many outlets averages 100% every six months, in no small part because of the grueling tedium.

Still, McDonald's manages to make its licensees, restaurant managers and burger slingers seem as standardized as its machines and cuisine. Licensees and managers of company-operated restaurants must graduate from a ten-day course at McDonald's "Hamburger University," a gleaming $2,000,000 institution in Elk Grove Village, Ill. The course leads to a Bachelor of Hamburgerology degree, with a minor in French fries. In the field, licensees and managers are incessantly hounded by roving inspectors (called "field supervisors") to make sure that the restaurant floor is mopped at proper intervals and the parking lot tidied up hourly. If a manager tries to sell his customers hamburgers that have been off the grill more than ten minutes or coffee more than 30 minutes old, Big Brother in Oak Brook will find out. Headquarters executives calculate exactly how much food each restaurant can be expected to throw away each day, and are ready to chastise a chronically deviant manager who has no good explanation.

Grillmen, "window girls" (order takers) and other hired hands must conform to strict rules. Men must keep their hair cropped to military length, and their shoes (black only) highly polished. Women must wear dark low shoes, hair nets and only very light makeup. Viewing the results, Harvard Business School Professor Theodore Levitt describes McDonald's as "a machine that produces, with the help of totally unskilled machine tenders, a highly polished product. Everything is built integrally into the machine itself, into the technology of the system. The only choice available to the attendant is to operate it exactly as the designers intended."

To some critics, the success of that machine is a devastating comment on American values. Pop Sociologist Vance Packard laments: "This is what our country is all about--blandness and standardization." Novelist Vance Bourjaily extravagantly views McDonald's popularity as a sign that America is "a failing culture." He explains: "This country is full of people who have forgotten what good food is. Eating in most countries is a basic pleasure, but people in the U.S. don't eat for pleasure. To them, eating is just something done in response to advertising."

Other critics assail McDonald's for blighting the land architecturally (under pressure from zoning authorities, the chain is rapidly switching from its original garish, candy-striped restaurant design to a more subdued brown brick configuration) and for allegedly sabotaging American nutrition. Harvard Nutritionist Jean Mayer warns that a steady diet of McDonald's fare and nothing else could give a customer scurvy because it would lack sufficient vitamin C. Mayer also says that the menu provides large amounts of fats and calories (557 for a Big Mac, 317 for a chocolate shake, 215 for a small order of fries) and contains almost no roughage.

'There is nothing at McDonald's that makes it necessary to have teeth," he says--though he adds: "I am nonfanatical about McDonald's. As a weekend treat, it is clean and fast."

Since no one is forced to eat at a McDonald's, the chain must be giving multitudes exactly what they want. For one thing, many people find the cheerily bland atmosphere reassuring. Says Sociologist David Riesman: "Americans have had a lot of experience being cheated and exploited when they eat out, and they feel unsure of themselves." McDonald's has designed a place to neutralize this anxiety, a place that does not make a customer feel he will not know how to use his fork.

McDonald's patrons put it more simply. To them, a McDonald's is a clean, well-lighted place, where they will be served quickly and courteously. Customer waits rarely exceed five minutes, even at the height of the lunch-hour crush; the company is introducing computerized, diode-display order-taking machines to cut delays even further.

Also, McDonald's is one of the few places left where a customer can buy a meal for $1 or less. Its price list reads like something exhumed from the good old days: hamburger 25-c-,,cheeseburger 30-c-, Quarter-Pounder 55-c-, Big Mac 60-c-, a small bag of French fries 24-c-, milkshake 30-c-. Prices vary slightly throughout the country; for example, most items in the New York City area cost a nickel more. Surprisingly, burgers are not much better than a break-even item for McDonald's; the highest profits come on French fries, soft drinks and the extra nickel a customer pays for a cheeseburger. McDonald's raised prices an average of 18% last winter on a number of menu items, but it has held the line since, throughout the worst U.S. food-price inflation in 26 years.

Millions of Americans have become virtually addicted to "junk food" as exemplified by McDonald's menu. "The food is good and the price is right," observes Pete DeKramer, an IBM programmer of Mahwah, N.J. David Green, a night, auditor in San Francisco, is enthusiastic: "McDonald's is my favorite place to eat in the whole world. I've eaten at McDonald's all around the country. I wouldn't move to any town that didn't have one."

Such ardent loyalty has made McDonald's one of the business successes of the century. Since the company sold stock to the public in 1965, system-wide sales have increased sixfold, from $170.8 million a year to the $1.03 billion in 1972, and profits have zoomed from $3.8 million to $36.2 million. Company-owned outlets now account for about 28% of sales and 16% of profits. In the first six months of 1973, sales rose 47% and profits 46% above a year earlier. The growth has kept the stock at stratospheric heights; $5,000 invested in McDonald's shares a mere seven years ago would be worth more than $320,000 at last week's close of 64 1/8.

Fast-Food Pharaoh. The man behind this success is named not Ronald McDonald, the ketchup-topped clown celebrated in company advertising, but Ray A. Kroc, a crusty, saltily spoken 71-year-old Chicagoan who is rather amused to find himself the pharaoh of fast food. "When I was a little boy, my father took me to a phrenologist," he recalls. "I was told that I would make my best living either in the food business or as a musician. You know, I've done both." After serving alongside Walt Disney in the World War I Red Cross Ambulance Corps, Kroc played piano in Chicago bars and restaurants and sold paper cups. His keyboard technique never earned him much of a living, but he sold enough cups to become Midwest sales manager for Lily-Tulip. In 1937 he quit, and for $ 10,000 bought exclusive sales rights to the Prince Castle Multimixer, a machine that could mix six milkshakes at once.

Enter, from left field, the Brothers McDonald--Richard and Maurice. They came to California from New England in 1928 in search of jobs in the movie industry, but became co-owners of a movie theater in Glendora, Calif. In 1940 they opened a hamburger drive-in near Pasadena, and in 1948 converted it to a self-service restaurant with some of the features of a modern McDonald's. "We were the first in the business to use infra-red heat lamps to keep the French fries warm," claims Richard McDonald, now retired in Bedford, N.H. (Maurice died in 1971). The McDonalds franchised six more outlets, on which they began putting golden arches in 1952. Two years later, the chain had grown enough to buy eight Multimixers for a single restaurant from Ray Kroc--who was so startled by the size of the order that he flew to San Bernardino to see what kind of business could be producing it.

"When I got there," says Kroc, "I saw more people waiting in line than I had ever seen at any drive-in. I said to myself: 'Son of a bitch, these guys have got something. How about if I open some of these places?' " Kroc talked the McDonalds into letting him franchise their outlets nationwide. Over the next five years he organized a chain of 228 McDonald's that even by 1960 were grossing $56 million a year. Kroc collected only 1.9% of the gross from the franchisees, and he had to turn over more than a quarter of that to the McDonald brothers. Dissatisfied, he called the McDonalds in 1961 and asked them to name a price for selling out everything, including the name.

They did--and, says Kroc, "I dropped the phone, my teeth and everything else. They asked me what the noise was, and I told them it was me jumping out of the 20th floor of the LaSalle-Wacker Building. They wanted $2.7 million." Kroc set out to raise it, but every lending institution he approached wanted stock in his franchising company. Kroc had none to give if he wanted to keep control; he had already handed out 38% to partners and lenders, and another 10% to his secretary, June Martino, in lieu of salary (she now lives quietly in Chicago with stock worth some $64 million). Finally, Kroc borrowed the money from a group of college endowment funds at what was then an exorbitant price: 6% annual interest, plus 1/2% of the gross sales of all McDonald's restaurants. Says Kroc: "The $2.7 million ended up costing me $14 million. But I guess there was no way out. I needed the McDonald name and those golden arches. What are you going to do with a name like Kroc?"

The deal, however, left Kroc admiring nothing about the McDonald brothers but their name. His dislike turned to hatred when they insisted on keeping their flagship restaurant in San Bernardino. Kroc had counted on it to produce much needed cash. Eventually, he opened a McDonald's right across the street, and since he then owned the name, forced the brothers to take their own name off their restaurant. They renamed it Mac's Place, but it did not last long. Says Kroc, with undisguised glee: "I ran 'em out of business."

Capturing the Suburbs. Though the McDonald brothers started some of the chain's technical innovations, it was Chairman Kroc who formulated the nationwide operating policies. He set out to capture the fast-growing suburbs, unlike the chiefs of Horn & Hardart, White Castle and other early fast-food chains, who originally concentrated on downtown locations. Explains President Fred L. Turner, 40, a onetime McDonald's burger frier who now oversees the company's day-to-day functioning: "Our move to the suburbs was a conscious effort to go for the family business. That meant going after the kids. We decided to use television, so we created our own character Ronald McDonald."

Today there are 50 "Ronalds" on contract to McDonald's across the country, making appearances at parades, county fairs and store openings. In addition, one Ronald is stationed permanently in Hollywood to appear in the firm's television commercials. A company survey last year indicated that 96% of American schoolchildren can identify Ronald McDonald, ranking him second only to Santa Claus.

Ronald is not the only weapon in McDonald's children's crusade. Executives decided early on to place napkins and straws out on the counter, instead of serving them with the food. "It became the kid's job to get the straws and the napkins," says Turner. "It cost a lot, but it was nothing compared with the repeat business we get because kids insist on going there." Indeed, not a few mothers have found that their children prefer Ray Kroc's burgers to Mom's own. "It's a fun place," says a Fort Lauderdale, Fla., 13-year-old. "It's like a circus. I feel happy here."

Ray Kroc codified McDonald's policies into a kind of fast-food religion summed up in the initials QSC (for Quality, Service, Cleanliness), a set of letters that every McDonald's employee is taught to utter reverently. The stamp of Kroc's personality, and business genius, is clearly on those letters, especially C. Says Kroc: "We made sure that no McDonald's became a hangout. We didn't allow cigarette machines, newspaper racks, not even a pay telephone. We still don't. We made the hamburger joint a dignified, clean place with a wholesome atmosphere."

Cleanliness is also a personal fetish of Kroc's that has become an awe-inspiring legend throughout the chain. Last month, on one of his incessant inspection tours around the empire, he walked into a McDonald's in Canada --and exploded like a raw potato in hot grease. "There was gum on the cement patio, cigarette butts between the wheel stops for the cars," he says. "There was rust on the wrought-iron railing, and the redwood fence needed to be restained. I went in there and said to the manager: 'You get somebody to mop this goddamned floor right now. And if you don't, I'll do it myself.' "

A Hamburger Degree. Such visits from Kroc are only one of the trials that a McDonald's licensee must endure. His courses at Hamburger U.. though short, are no snap; they cover everything from how to scrape a grill to how to post a double-entry ledger. "This is a hard-working place," says "Dean" Donald Breitkrentz, 36, a onetime candymaker. "Some of these people put in 14 hours a day. They get up at 6:30 in the morning to study."

On a recent morning, one of the school's eight instructors lectured on how to service an Everpure T-9 water filter, which cleans the water used in soft drinks. Students scribbled notes as furiously as if they were taking hamburger orders from a busload of Cub Scouts. Slides flashed across a giant screen detailing every movement of the hand required to maintain the filter. One student asked timidly: "How much charcoal do we put in it?" The instructor replied: "The bag is premeasured Use it all."

Before receiving his Hamburgerology degree, the licensee must lay out an average of $150,000, at least half of it in cash. For that, he gets to lead a life regimented by Ray Kroc and subordinates. To begin with, the licensee has little choice of where he will operate. Headquarters executives pick out all the sites, buy (or sometimes lease) the land, arrange for construction of the store, and rent it with equipment to the licensee for 8.5% of gross, plus a 3% annual franchise fee. "We're just like the Mafia; we skim it right off the top" jokes a financial officer. In the beginning Kroc sold territorial franchises, but now a licensee buys only the right to operate at a specific address for 20 years; when the license expires, he must put up another $150,000 or so for a new one.

The licensee gets some latitude in selecting which local promotions and public service projects to bankroll, but no choice whatever as to whether to be a do-gooder or not. Community service is a Ray Kroc obsession, and every McDonald's licensee is expected to spend a generous portion of profits on it. Headquarters gives each licensee a thick book of suggested promotions and constantly prods him to come up with new ones on his own. In New York's Harlem, Lee Dunham, one of McDonald's 60 black licensees, serves free hamburgers to unwed mothers every Saturday; in Chicago this summer licensees had carnivals on their parking lots to raise money for muscular dystrophy research. Throughout the country, McDonald's managers often rush free food to disaster sites, as local outlets near Roseville, Calif., did after last April's ammunition train explosion.

Careers Abandoned. Oddly, in a chain with McDonald's passion for standardization, licensees get neither food nor supplies from Oak Brook. Restaurants buy their own, mostly through regional cooperatives, though naturally the purchases must meet rigid headquarters specifications. The basic hamburger patty must be a machine-cut, 1.6-oz. chunk of "pure" beef -- that is, no lungs, hearts, cereal, soybeans or other filler -- with no more than 19% fat content, v. 30% for some competing ham burgers. The 3 1/2-in.-wide bun must have a higher-than-normal sugar content for faster browning.

McDonald's outlets have enough massed buying power -- they purchase 1% of all the beef wholesaled in the nation -- to line up steady supplies at stable prices in all normal times, and Oak Brook will help out in a pinch. Headquarters executives are currently buying up live steers with "contributions" levied on licensees, who get the meat back in the form of patties. McDonald's chiefs figure that they have corralled enough steers to get the company through the current beef shortage and avoid a price boost when the ceiling comes off retail beef prices this week.

In return for their money and submission to headquarters, the licensees get to use the McDonald's real estate, name and formula. For most, that is close to a license to print money. The average outlet grossed $508,000 last year, earning its operator upwards of $70,000 before taxes. For that reason, McDonald's receives thousands of license applications a year and accepts only about 10% of them. The company gives preference to existing licensees, but values business or professional experience of any kind. Every year large numbers of executives, doctors and lawyers abandon their careers to take up the spatula. (They pretty much have to; Kroc demands that anyone putting up more than half the price of a McDonald's license work full time under the arches.)

Guy Rodrick, 48, practiced law in Chicago for two decades before he invested in a McDonald's outlet in 1967. "I became so fascinated with it that I began spending more time at McDonald's than with my law practice," he says. "Finally, my law partner suggested that I spend full time at one place or the other. I chose McDonald's and I have never regretted it." Four years ago, Rodrick moved to Florida and opened four outlets. Today he works seven days a week behind the counter and earns "a million dollars in happiness."

Lee Dunham, the Harlem licensee, was a New York City cop. He faced some problems that Hamburger U. did not prepare him for. Teen-age gangs tried to claim the store as their turf. "They would come in with their chains and start rapping them on the counter," says Dunham. One day Dunham pulled out the .38 revolver that he is licensed to carry and told the gang leaders: "The moment you come in here, you belong to me." Then he bought the leaders hamburgers, talked about black image with them, and gave some of them jobs. Today, Dunham's store grosses $110,000 a month, more than twice the national average, and his all-black staff of 120 keeps the place immaculate. "I tell them, 'Let's do better than the Man downtown,' " he says. "Any time you say 'beat Whitey,' they work harder."

Young employees at McDonald's are not munificently rewarded. Most make little more than the minimum wage of $ 1.60 an hour. The Nixon Administration last spring proposed raising the hourly minimum to $2.20 in 1975 but partially exempting students who work part time, a category that covers most of the McDonald's work force. Washington skeptics, who note that Kroc openly gave $250,000 to the Nixon campaign last year, dubbed the measure "the McDonald's bill." Congress accepted the special student provision but Nixon last week vetoed the minimum wage bill as inflationary.

Happy Home. Many of the youths exhibit surprising dedication. Pilferage runs only about $30 per month per outlet, a percentage of sales far below the average for all retailing. Wade Litchenberg, 18, a night manager in Fort Lauderdale, describes his job as "a real challenge. I love it--meeting people, learning all about the business." Says Lynnette Myers, 18, of Jackson, Miss.: "It's a happy place to work. It's my home away from home."

One reason for the enthusiasm may be that McDonald's employees who work hard can go high quickly in the expanding business. President Turner started frying hamburgers at Kroc's first franchise near Chicago in 1956. He rose so rapidly as an "operations man," keeping an eye on new stores, that he never had time to claim the license that Kroc promised him. McDonald's also pays close attention to suggestions from behind the counter. Several of the chain's new products have originated in the minds of low-ranking employees. Among them: Egg McMuffin, a 63-c- breakfast item made from fried egg, melted cheddar cheese and a slice of Canadian bacon, all on an English muffin.

McDonald's has had some stumbles. It has expanded overseas with all the zeal of missionaries bringing hamburgers to the heathen.* "We are educating people to a whole new way of life--eating with your fingers instead of forks," says Rolf Kreiner, who directs McDonald's advertising in West Germany. Still, McDonald's European branches lost $1,000,000 last year, partly because too many were located in suburbs, which are not flourishing overseas quite as much as in the U.S. The company is now shifting abroad to downtown locations, where it is drawing big crowds of both foreign nationals and tourists eager for a taste of home. One American girl, stopping at the Paris McDonald's on the Champs-Elysees, explains: "Over here you're supposed to try new things. So I tried the Big Mac."

Some problems loom at home too. Continued growth of the fast-food industry seems almost assured for several reasons: Americans are spending more time in their cars, and 44% of the nation's women hold paid jobs, giving them more money to eat out and less time to cook at home. But the industry has long been overcrowded; Minnie Pearl's Chicken Systems, Joe Namath's Broadway Joe's and a number of other chains all fell on hard times as competitors proliferated. McDonald's will have to scramble harder and harder to stay ahead of the pack. At present, a McDonald's outlet requires a population base of 30,000 to support it in the style to which Ray Kroc is accustomed. The company has already exploited many of the best locations.

Show Tune. Kroc nevertheless foresees ever greater expansion. One bright hope is, paradoxically, a return to the city. Swallowing such old fears as crime and high real estate costs, McDonald's has begun opening dozens of downtown outlets--and all pull in high revenues. Another possibility is what Kroc calls "internal growth," that is, wringing more sales out of each outlet.

The chairman intends to stick around to oversee that growth too. His undiminished vigor is evident to anyone visiting Oak Brook headquarters where the offices are open cubicles and Kroc's shouting rings through them all (executives who need some peace and quiet retire to an elaborate "think tank" equipped with a 700-gal. waterbed).

Kroc has a personal fortune estimated at $500 million, and he marked his 70th birthday by giving away $9,000,000 worth of McDonald's stock to employees and another $7,500,000 to Chicago-area charities. Still, he wants more. "I expect money like you walk into a room and turn on a light switch or a faucet," he says. "It's not enough."

Moreover, the quiet pleasures of retirement could hardly match the kick that Kroc, the unsuccessful piano player, gets from finally wowing an audience. "When you are in this business you are in show business," he says. "Every day is a new show. It's like a Broadway musical--if people come out humming the tune, then the show was a success." Today, Ray Kroc's show will play to standing-room-only crowds at more than 2,500 houses round the world. More than a few patrons will walk out, stomachs full, humming his tune: "You deserve a break today ..."

*Although the hamburger originated in medieval Europe, as raw beef shredded by a dull knife. Merchants from the Baltic carried the dish to Hamburg, where it is still popular both raw and cooked. German immigrants brought it, fried and bunned, to South St. Louis, and introduced it to the rest of the U.S. at the St. Louis World's Fair in 1904.

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