Mc Donald’s vs Burger King, A Tale of Big Bucks and Business Innovation
Becoming super successful in business doesn’t ever come easily. It comes with its hurdles of failures and setbacks, wars with competitors, government and even customers. How many react can be the sole difference between death and survival.
I somehow stumbled on some podcast shows while also reading some books. The shows do justice to how the biggest brands were able to surf the ocean of uncertainty, engage in fierce competition and overtake the big players.
This write up was inspired by @businesswars from @wonderymedia.
Having listened to a couple of series, I can attest it’s one of the best things that happened to me in 2018. The impact is invaluable and the lessons, deep.
So, In the spirit of influencing business decisions through successful and failed companies, I’ve decided I’ll be posting write-ups about the @businesswars shows with additional researched contents.
The purpose is so as we can relate, share ideas, and make useful, some gained strategies and knowledge used by some of the well known iconic businessmen to survive their businesses.
Follow @businesswars on twitter for updates on weekly releases.
Around Dec 1948, San Bernardino California. The news was spreading across the country about how Mark McDonald and Richard Mc Donard are re-inventing the face of a fast-food burger joint in California on the edge of Miami desert.
Fans across the nation take a tour to California to witness the tale and of course, to also take a bite. On March 1952, all the way from Florida, Mattew Burns and his son-in-law, Keith Kramer are headed on the same tour but this time, with other intentions.
On arriving at the Mc Donald burger joint, they barely believe what they see. The lengthy line and more interestingly, the fast service time. After the line cools off, Cremer introduces himself to the Mc brothers and was kin to know more about their service.
Mark replies; We used to be a business drive-in but to save cost and increase service time, we fire all the waiters and waitresses and also cut away most of the food menu to short time hamburger. Now, we make twice more than what we used to and at the same time cutting 1/3 of production price.
Kramer, like a wildfire waiting to explode, together with Burnt, meet with Gorge Reed to buy an electric broiler that can make up to a 100 of hamburgers in an hour. An “Instant burger broiler”
They ash a plan… to combine McDonald's system with Reed engine.
with the winning combination of taste, simplicity, and speed. They are positive they can make a whole lot of money.
August 1953, In Boulevard, With the inspiration from Mc Donald’s, Kramer has just completed the construction of a Burger drive-in he called “Instant Burger” when a man in his 20s walks in. His name is David Edgerton. He’s been wanting to buy an ice-cream franchise in Miami and after conversing with Kramer on the simplicity, low cost, fast, and high quality operating process Instant Burger promises, he couldn’t but easily switch allegiance to becoming the first Instant Burger franchisee in the whole of Miami.
Edgerton’s hope is to build the Instant Burger joint across the city of Miami. But with little cash in the bank, Edgerton knows he’ll need a partner with a very deep pocket.
On April 1954, Eginton was sitting in the basement of his first restaurant near Miami airport and waiting for an important visitor, James McLemore. He wants McLemore to be his business partner. His pitch went horribly wrong but didn’t deter McLamore from investing and becoming a joint owner of the Maimi Instant Burger King franchise.
By 1955, Edgerton and McLamore had opened 5 more restaurants in the Miami area but, sales continue to suck. They can’t figure out why people are shunning their self-service drive-in.
Elsewhere in the fast-food world, words are spreading fast about the Mc Donald’s brother. Inspired by their achievement, competitions are opening fast with the goal of one day becoming a multinational food chain.
The atmosphere is still fresh and friendly as competition still remain local and unbothered. Somehow, someone somewhere in Chicago will soon change all that by posing the deadliest threat to every fast-food chain nationwide. His name is Kroc Ray, a milkshake machine sale man in Chicago, planning to take Mc Donald nationwide and it’s the plan that will make him Instant burger deadliest enemy.
On July 1954, Ray Kroc appears in Mc Donald drive-in after receiving multi-request for his milkshake mixer machine from various drive-ins across the country. He wonders where the hook lies.
Mark McDonald gave Kroc a tour of the kitchen, showing him how his milkshakes machine works and how it’s saving them awful time producing dozens of hamburger in minutes.
While all these were ongoing, the salesman spirit in Kroc was projecting the tones of money he could profit from selling his milk mixer machine should Mc Donald expand nationwide.
He presented this to the MC Donald brother and they declined, claiming to be okay with the profit they make and moreover, won't’ want to deal with the headache of ensuring quality across the country.
Kroc was taken aback by the lack of ambition by the MC brothers. Kroc knows himself to be a goal getter, a business prodigy, a man always horning for the next big deal. So, he tried another approach by asking to be in charge of quality control of the Mc Donald’s franchise with the Mc brothers having to do nothing but receive 1.5% of annual franchisee sales while Kroc takes home a little 0.4%, a rather thin margin. Unfurled, Kroc knew his cash will flow from selling his milkshake machine to all the franchisees.
On March 1955, Kroc completed his first franchise in Chicago, the opening was dazed with a major hit when he realized the Mc brother already sold the franchise for Mc Donald in Chicago to a local company. Outraged, Kroc was left with the only option of buying the local ice-cream company for a $25,000. Having invested all he has on building the first Chicago franchise, Kroc goes the way of loan and debt to raise the 25k. Now, just like Instant Burger King David Edgerton and James McLamore, The 3 entrepreneurs thought they were getting up on the ground of a food revolution. Their hope of fast growth fast cash is now on the brink and if they don’t act fast, their inspired new businesses will crash on the ground of bankruptcy before even taking off.
To Be Continued…
