Page 670 - Introduction to Business

A-4 APPENDIX

BRIEF HISTORY However, over the years, the company has added a
McDonald’s restaurants have been in existence since the number of new products—some that proved to be suc-
1930s. The original hamburger stands were introduced cessful and some that did not:
by brothers Dick and Mac McDonald in San Bernardino, • 1965 Fish sandwich. Still on McDonald’s menu.
California. In 1954, salesman Ray Kroc took exclusive • 1973 McMuffin. This breakfast sandwich was the cat-
distributorship of a five-spindled milkshake maker alyst for McDonald’s to add a full breakfast menu five
called Multimixer after he heard and saw how the years later. The company now accounts for around
McDonald brothers ran eight Multimixers simultane- one-fourth of all breakfasts eaten outside the home.
ously to serve a large number of customers efficiently. • 1983 Chicken McNuggets. A huge success, they are
He then decided to investigate McDonald’s operations. still on McDonald’s menu.
Impressed with the simplicity of the hamburger • 1987 Ready-to-eat salads.
operation—they sold only hamburgers, cheeseburgers, • 1991 McLean Deluxe sandwich. A 91 percent fat-free
French fries, milkshakes, soft drinks, and apple pie— burger, it was dropped in 1996.
Kroc was able to convince the owners to allow him to • 1990s Fried chicken, pasta, fajitas, and pizza. All were
take the restaurants nationwide (hoping to sell eight failures.
Multimixers at each McDonald’s outlet) through fran- • 1996 Arch Deluxe and Deluxe burgers. Targeted to
chising agreements. Most of the early locations were on adults, they never caught on.
corner lots in suburban locations. Thirty-four restau- • 1998 McFlurry desserts. Caught on and are still
rants were in existence by 1958; sixty-seven more around.
opened in 1959. But real growth occurred in the 1960s,
spurred by the increasing popularity of the automobile Technology
and the greater number of people living in the suburbs. The efficient operations of the early McDonald’s is what
In 1961, McDonald’s sold out to Kroc for $2.7 million. attracted Kroc. Each worker’s steps were designed to
In 1965, McDonald’s went public with a share of common ensure maximum efficiency. This saved preparation
stock selling for $22.50. If a person had purchased 100 time, which reduced costs and allowed McDonald’s to
shares at that time, that investment of $2,250 would have sell its hamburgers at 50 percent of what competitors
been worth $1.8 million by the turn of the century. were charging.
In 1968, the company opened its 1,000th restaurant. When Kroc was operating the first McDonald’s in Des
By 1988, it had 10,000 outlets. By 1997, 23,000 restau- Plaines, Illinois (outside of Chicago), he was faced with
rants were in existence due to an aggressive expansion mushy French fries. He solved the problem by using an
program that averaged opening 2,500 restaurants annu- electric fan to dry potatoes that had been cut and placed
ally. In 2002, the company was operating around 27,000 in cold water and then blanched. Kroc also had to adapt
restaurants worldwide and sales reached $15.41 billion. the McDonald’s building to northern weather; furnaces
The company also had mini-restaurants located inside had to be installed and inadequate ventilation had to be
Wal-Marts and Chevron stores. dealt with.
In February 1998, McDonald’s announced its first In the 1960s, McDonald’s continued to emphasize
move outside its traditional product lines by obtaining a technology. Under the leadership of Fred Turner, presi-
minority interest in Chipotle Mexican Grill restaurants. dent and chief administrative officer, McDonald’s deter-
Other such acquisitions soon followed: Donatos Pizza mined the optimum number of hamburger patties that
chain and the 750-unit Boston Market restaurants. should be in a box and also began using presliced ham-
burger buns in order to save preparation time.
Global Expansion In 1975, McDonald’s opened its first drive-thru
window. This method of delivering products now
In 1967, McDonald’s opened its first restaurant outside
accounts for half of the company’s sales. In the 1980s,
the United States—in British Columbia, Canada. By the
when McDonald’s began adding urban sites, it was
early 1990s, it had 3,600 operations in 58 countries. In
forced to develop new architectural styles. In 1979,
2002, 53 percent of its 27,000 restaurants were located
Braille menus were brought out; they were reintroduced
outside the United States in 120 countries, and these
in March of 1992. Clamshell cookers, able to cook both
overseas operations accounted for 60 percent of sales
sides of a hamburger at the same time, were invented.
and 50 percent of profits.
In 1998, a major technological effort was under-
taken. The “Made for You” system was introduced to
Products provide customers with “fresher, hotter food” and
The main products of McDonald’s have been hamburg- enabled consumers to request special orders. The
ers, cheeseburgers, French fries, and soft drinks. system relied on its flexibility to allow for easier intro-

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