McDonald's generated total revenue of 23.22 billion U.S. dollars in 2021. It is a name that is most recognizable to everyone in the world. That is why I decided to start this series by talking about the franchise's history.

Our Story Begin In The Late 30s

Patrick McDonalds took his sons, Richard and Maurice, from New Hampshire to Hollywood California. The sons had a filmmaking ambition that Patrick didn't stand in the way of it. Patrick focused on his little bigger stand as his sons were trying their luck in starting a motion pictures company. All three didn't know that this little burger stand would end up changing the world of restaurants forever.

By 1947, the little burger stand turned into a restaurant called "McDonald's Barbeque". The sons saw the family's restaurant thriving and decided to give up their filmmaking dream and focus on the restaurant instead.

World War 2 Changed Eating Mood

After World War 2, more families decided to head out for lunch at restaurants rather than staying and eating at home. That change in mood resulted in the restaurant business thriving. Richard and Maurice decided to keep their focus on the youth demographic.

The new cool thing was the car delivery system. Very similar to the drive-thru nowadays, that system consisted of a car driving by the restaurant with waiters and waitresses walking to the car and taking the orders, and then bringing them to the car.

Richard and Maurice's Philosophy

Their philosophy was to sell a lot for low prices. They looked at the numbers and realized that what they sold the most was burgers, fries, coffee, and apple pie. So, naturally, they decided to focus on what sells the most reducing their menu to six things only.

Later on, they switched their focus from juices to milkshakes. And replaced chips with french-fries.

Reducing Production Time

Even with their success, Richard and Maurice still felt something was missing and focused on the 5 minutes time it is taking to make a burger. So, instead of having one person take 5 minutes to make a burger sandwich, they decided to have 5 different people in charge of different stages in making a burger.

That did two things.

Reduce the time required to finish one order of burger
Reduce the need for professional chefs

The pair chalked over a tennis court and came up with a design and system for the kitchen titled "Speedee"

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The new design helped the burger-making process to be faster and smoother. Its biggest success reason is that they didn't hire expensive chefs but rather have inexperienced people do each step as those steps are easier to do when all each person has to do is one task.

That system reduced the wages they needed to pay and created a new line of work for students and old people.

The Problem

The system seems smooth, and it is. However, the changes implemented cost them problems at the start as they abandoned the car delivery system and had actual waiters. They turned the restaurant into a help yourself system. That's basically the system you see today if you're not going through the drive-thru.

As we also mentioned they reduced their menu. McDonald's basically stopped being a barbecue restaurant and became a burger specialist place. So, steaks and most of the stuff on their menus were thrown out.

The Benefits

Yes, changing the system cost them a lot of the old customers. However, it attracted their preferred demographic: The youth. Not having to pay for waiters and professional chefs allowed them to bring the price of the burger to 15 cents. That is less than two dollars in today's money. Such cheap food and fast service attracted the young people.

With high-quality food and low production cost, McDonald's was profiting nicely. Add to that the restaurant was using paper bags and plastic utensils, therefore, there was no need for the people to return their plates and utensils afterward.

Great system, great profit. But, there was still one more thing.

Ray Kroc

Perhaps the most important in this story. Richard and Maurice wanted a milkshake machine that could fill up multiple cups at the same time. Ray Kroc was a representative of Prince Castle, a manufacturer of milkshake machines among other stuff.

Richard and Maurice agreed to buy 8 of these machines. It was an expensive one that selling only units was a cause of celebration. It wasn't quality, speed, or the price that attracted Ray Kroc to McDonald's as much as the fact that a restaurant could sell such a large amount of milkshakes. So, he went to investigate it further.

Kroc loved the restaurant and its system. Unlike the McDonald's brothers who just wanted to make easy money, Ray Kroc had more expansion ambition. Ray Kroc saw it more befitting that the restaurant expands.

The Dinner Meeting

Kroc invited the two brothers to a restaurant where he shared with them his ideas for the restaurant and how it could expand more. The brothers didn't want to hassle of having to go through all of this again by opening branches. That concern was put to rest when Kroc used the magic word that changed the world and started an industry that is now worth half a trillion dollars: Franchise.

In layman's terms, a franchise basically means you could give an entity the right to use your name in exchange for a percentage of the profits or any money in return.

How does that equate to Kroc's version and McDonald's? That's something for the next parts of this series.