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TIME Magazine
November 3, 1961, p. 81:

Meat, Potatoes, and Money
    In Rockford, Ill., one noon hour last week, a cooked-out housewife packed her three small children into the family car and set her course for a peppermint-striped glass-and-tile structure boasting a huge sign: MCDONALD'S HAMBURGERS. Stepping up to the self-service window, she ordered four hamburgers and milk shakes. Just 41 seconds and $1.40 later (hamburgers, 15¢; shakes 20¢), she was on her way back to her waiting brood carrying an instant lunch.

    On the strength of such low-priced assembly-line feeding, Ray A. Kroc, 59, has built his Chicago-based McDonald's Corp. in less than seven years from a company on paper with $1000 in assets into the nation's largest drive-in chain-- a string of 294 highway stops stretching from Connecticut to California. The McDonald menu is rigidly limited: besides hamburgers and milk shakes, McDonald drive-ins offer only French fried potatoes (10¢) and soft drinks (10¢ and 15¢). But on this limited bill of fare, they expect to ring up sales of $60 million this year, enough to give McDonald's Corp. estimated pre-tax profits of more than $4,000,000. More McDonald outlets are popping up fast (new openings this week: Albuquerque, Atlanta, and Durham, N.C.).
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Wall Street Journal The Wall Street Journal
has no equal providing the daily news of the business world. It is also a trusted source for other news and information, and it's editorial pages are news events of their own. Save 23%! (lowest rate available)
    ...Kroc spent 17 years selling paper cups and then Multimixer milk shake makers. One day in 1954 he stopped at a drive-in run by two brothers named McDonald in San Bernadino, Calif. Impressed by their efficient operation, Kroc struck a bargain with the brothers: in return for use of the McDonald name and techniques, he agreed to pay them 0.5% of all future sales of what he already envisioned as a nationwide chain of franchised drive-ins.

    ...Since then, demand for franchises has become so hot that Kroc has increased his price from the original $900 to $12,500, plus a 2.2% royalty of monthly sales. Currently, there is a paid-up backlog of 60 would-be licensees waiting (some for more than a year) for a Kroc-assigned location. Including down payments on equipment, rent, and signs (all paid to Kroc), plus working capital, a licensee needs at least $40,000 to sell his first hamburger.

    So far, it has been worth the money. Frank Patton, 41, quit his industrial-equipment sales job four years ago to take the Rockford franchise. His business has increased 10% to 20% every year, last year grossed $210,000 and nearly $40,000 in pretax profits...

    Hamburger College. Before opening for business, licensees must spend 3½ weeks at McDonald's "Hamburger College" in Chicago, where, with the aid of such gadgets as an automatic patty flipper, they master the technique of cooking up to 36 hamburgers at a time. Textbook is the 81-page McDonald's Manual, which specifies every operation in detail, e.g., hamburgers must be locally purchased "commercial" grade chuck (fat content 17% to 20%), formed into 1.6-oz. patties 3 5/8 in. in diameter. Each is to be garnished with ¼ oz. onions, one teaspoon of mustard, one tablespoon of catsup and a pickle 1 in. in diameter...

    ...despite mounting competition from a score of rival chains that have copied his system, [Kroc] confidently expects to have 550 drive-ins doing $90 million worth of business by the end of next year. Says he: "What we have attempted to do is eliminate those things that people don't eat. You can't eat a 20% tip, a perfumed finger bowl or a waitress. It isn't the cost of food that has gone up, it's the service. We are in the meat and potatoes business-- and meat and potatoes aren't a fad."




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