Grinding It Out (25 page)

We were accused of “shocking manipulation” in our dispute with labor unions in San Francisco. I suppose that's another way of saying we don't fool around. It's always shocking to be a loser. I was quoted as asking Mayor Alioto, “What would it take to put a third McDonald's in San Francisco?” I never spoke those words or any like them.

None of this is meant to sound as though I think I've never made a mistake. Far from it. I could probably write another book about my mistakes. But it wouldn't be very interesting. I've never seen negatives add up to a plus.

One time Harry Sonneborn, June Martino, and I invested in a beer garden restaurant on the south side of Chicago. That was a loser. I tried my hand with an idea for an elegant hamburger restaurant called Ramond's. The corporation opened two of them, one in Beverly Hills, the other in Chicago. They didn't take hold, so I cut our losses and got out. One good thing came of Ramond's: it gave us the prototype for the in-city McDonald's restaurants that are now proving so popular. Part of the problem with Ramond's was my insistence on quality in a restricted-volume kind of operation, which kept the profit margin thin as the skin on a hot dog. The same was true of a venture we started back in my California days, the Jane Dobbins Pie Tree chain. Hell of an idea. Great pies, too. In fact, they were so good we were going broke selling them. I've also come up with some pretty big flops for McDonald's. I've already done the blow-by-blow on the ill-fated Hulaburger and told how it was devoured by the voracious Filet-O-Fish. Lou Groen still ribs me about that if he gets a chance. Roast beef was another bust. We were pretty excited about it at first. But roast beef is difficult for our kind of operation to deal with. It went well in a few stores, but it simply did not adapt to our system. We learned a lot about testing requirements in that roast beef fiasco, though. That's important, because if you are willing to take big risks, and I always have been, you are bound to blow one once in a while; so when you strike out, you should try to learn as much as you can from it. I think we probably found out enough about our own methods from the roast beef experiment to more than make up what we lost on it.

There's one other mistake I made that I mention only because so many jackasses have brayed about it. That was my $250,000 donation to President Nixon's campaign in 1972. I let myself be talked into that by Nixon's fund-raiser, Maurice Stans, and it wasn't until later that I realized I had made the contribution for the wrong reason. My motive was not so much pro-Nixon as it was anti–George McGovern. I should have known at the time that this went against my rule of not trying to make a positive out of a negative action. The worst thing about the donation was the subsequent implication by some sons of bitches that I made it in order to get favorable treatment from the federal price commission in regard to the price of our Quarter Pounder. As my friend and lawyer, Fred Lane, says, “This has been thoroughly investigated by the Watergate Select Committee, the Government Accounting Office, the Department of Justice, and the House Committee on Impeachment, and none found any hint of impropriety.” I use his language because my own is unprintable.

A student at one of my talks at Dartmouth asked if I demanded that my executives in McDonald's follow my politics.

“I can answer that,” Fred Turner interjected. “Kroc voted for Nixon and I voted for McGovern.”

“That's right,” I added, “and we were both wrong.”

After the laughter died down, I added, “I believe that if two executives think the same, one of them is superfluous.”

I get mad as hell and cuss when someone takes cheap shots at McDonald's or me in print. Yet I always admired Harry Truman and liked what he said about getting out of the kitchen if you can't stand the heat. I'm not about to get out of the kitchen. I've got a lot more plans I want to carry out for McDonald's before I hang up my spatula.

 

16

One evening not long after I had bought the San Diego Padres I was shooting the bull with Dave Condon, sports columnist for the
Chicago Tribune.
We got onto the subject of that great Cubs team of 1929, when they made it to the World Series against Philadelphia. “You know, Dave,” I told him, “I am the perfect example of reincarnation. I died the day Hack Wilson lost that fly ball in the sun!”

Kidding aside, I do sometimes feel as if I've been given an extra shot at life. I owe this to medical science, and that's why I set up the Kroc Foundation.

I had resisted the foundation proposal at first because it was presented as a tax shelter. I'm not interested in that sort of thing. I don't make charitable donations because they will give me tax deductions. That's a peculiarity of mine that runs against common business practice. It's the same thing with expense accounts. I've never submitted a personal expense account to McDonald's in my life. In the early days, of course, it would have been an empty exercise. I didn't take a salary; I was keeping the thing afloat with my income from Prince Castle Sales. But even in later years it never entered my mind that I should be reimbursed by the company. I pay most of my company expenses out of my own pocket, although, of course, I do use my company credit card. By the same token, I have purchased a fleet of nineteen customized Greyhound buses, outfitted with kitchens, rest rooms, telephones, color television, and lounge-style seating and I rent these to the corporation for one dollar a year. Each of our districts books the use of one of these Big Mac buses to its operators for worthwhile activities such as taking disadvantaged children and senior citizens on outings. I also bought the company plane, a Grumman Gulfstream G-2 jet. McDonald's rents it from me for the same low price, one dollar a year. The G-2 can fly anywhere in the world, and we make good, cost-cutting use of it for executive travel. My point here is that I believe in spending my money in useful ways. It wasn't until Don Lubin proposed the foundation as a means to benefit medical research that I pricked up my ears and started paying attention.

As we discussed the idea, I realized that my brother would be exactly the right man to make president of the foundation. Robert L. Kroc is a Ph.D., and in 1965 he was head of the physiology department in the research institute of Warner-Lambert, the pharmaceutical firm. His specialty was endocrinology, and he was widely respected in the field. It was not easy to persuade Bob to give up his post and his home in Morristown, New Jersey, and move his household to my ranch in Southern California. But he finally did it in 1969, and he has done a fine job of establishing the foundation. The headquarters building at the ranch has complete facilities for scientific conferences and presentation of research papers.

My brother Bob talks the language of science. He's pedantic and painstaking; he's willing to get fewer things done in order to make fewer mistakes. I'm impatient. I'm willing to make a few mistakes in order to get things done. So our thinking is miles apart on the handling of money for the foundation. I never realized it could be so damned difficult to give away money. Our grants seem to take endless study and deliberation. Yet I must say that Bob has managed to fund some important research. We have had many highly esteemed scientists and physicians attend our conferences, and the results of their sessions have been published as books and as supplements to the most prestigious medical journals.

The Kroc Foundation supports research into diabetes, arthritis, and multiple sclerosis. All three of these diseases strike young adults and rob them of vitality in their best years. I selected them for that reason, and also because each has touched my own life destructively. I have diabetes myself. My first wife, who is now dead, suffered from it, too, and my daughter, Marilyn, died from it in 1973. Arthritis had rusted out my hip joints to the point where I couldn't get around without a cane. In 1974 it confined me to bed, and I said that was it! My doctors had resisted performing surgery on me because of my diabetes and high blood pressure, but now I insisted on having one of those plastic hip joints even if it killed me. I'd rather be dead than forced to stay in bed. Well, it worked out fine. I threw my cane in the closet, and now my wife has to keep reminding me to slow down. Multiple sclerosis has handicapped my sister, Lorraine. She and her husband, Hank Groh, had three McDonald's in Lafayette, Indiana. My brother says Lorraine might have been a female Ray Kroc because she takes after me in many ways.

The foundation expanded its activities in 1976 to include a public awareness program relating to the effects of alcohol misuse on the family. The program is conducted under the name Operation CORK (Kroc spelled backward), and it is one of Joni's main concerns. She has devoted a lot of time and organizational effort to it, working with the Rev. John Keller and Fred Lane.

I have always enjoyed helping other people. It's the reason for my interest in the work of the foundation. It's also why, early in 1972, I decided I would celebrate my seventieth birthday that October by giving a significant amount of money to some worthy cause. A million dollars was the figure mentioned when I first discussed the idea with Joni and Don Lubin. It seemed like a nice, round number. But as the weeks and months went by and we drew up lists of possible recipients, the amount of money kept growing.

I planned to benefit Chicago institutions because Chicago is home for me and for McDonald's, and I wanted to show my gratitude. Another consideration was the fact that young people and families have been important to the success of McDonald's, and I wanted my gifts to acknowledge that. So my final list had major gifts to Children's Memorial Hospital, for genetic research and construction of new facilities; the Passavant Pavilion of Northwestern Memorial Hospital, for a research institute to study birth problems; Adler Planetarium, for the development of a Universe Theater; Lincoln Park Zoo, for construction of a Great Ape House; PACE Institute, for educational and rehabilitation programs for inmates of Cook County Jail; Ravinia Festival Association, to start an endowment fund; and Field Museum of Natural History, for a major exhibit on ecology.

It happened at the time these gifts were being considered that a blood donation day was organized at the McDonald's office in Oak Brook to help the young son of Red Llewellyn of our accounting department. The boy, one of ten children, was being treated for leukemia at St. Jude's Children's Research Hospital in Memphis, Tennessee, and he needed many blood transfusions. Red's wife came in later to thank me. She told me about what marvelous care her son had received at St. Jude's. So I did some investigating and learned more about the place. Then I added it to my birthday list.

In addition to the major recipients, I made contributions to Harvard Congregational Church in Oak Park, where I went as a boy, and to the Public Library in Rapid City, South Dakota, of which Joni was a trustee. When I added it all up, my birthday gift list totaled seven and a half million dollars. I'll tell you, it felt mighty good to be able to announce that kind of present!

As I said at the time, I had seen McDonald's become a national institution. America is the only country where it could happen, and I took genuine pleasure in sharing my good fortune with others.

My friends and business associates demonstrated in their birthday gift to me that they understood exactly how I felt. They established the Ray A. Kroc Environmental Fund at the Field Museum of Natural History. I was speechless with delight when it was announced by Leland Webber, director of the museum, that the fund had received more than $125,000 to provide educational programs such as film series, field trips, and workshops for young people.

To cap the celebration of my three-score-and-ten years, Joni threw a wonderful party for me in the Guildhall of the Ambassador West Hotel in Chicago. I was looking forward to seeing the faces of my closest friends, including many McDonald's employees—secretaries, field personnel, executives—that night, because I wanted to see their reaction to my birthday cards. They were in the form of gifts of McDonald's stock I had arranged for them to receive in the mail that day. In some cases the stock was divided between a man and wife and their children. It took a lot of undercover work to come up with all the social security numbers of spouses and children that were necessary to convey the stock and still keep the plan secret. But we managed it, and the surprise helped lift the spirit of the party to cloud level. I was particularly pleased to make the stock gifts to the wives of some of our executives, not only because they'd become my friends but because a McDonald's wife has to be a very patient and understanding person. I know that all of them make great sacrifices to allow their husbands to succeed, and I wanted to be sure that these women knew my concern and appreciation.

Talking about gifts and my philanthropies reminds me of one of the high points in my life. I have received a lot of awards over the years. My office in Oak Brook is a showcase for all these plaques and ribbons and trophies. Some people think it's kind of corny for the chairman of a large corporation to display such an array of mementos. But I'm proud of each one, from the rough, handmade tribute from a Boy Scout Troop to a goldplated Multimixer. But none of these awards gave me a bigger thrill than to be honored as
Ray A. Kroc, Philanthropist, Outstanding Chicagoan of Today
at a banquet given in 1975 by the Chicago Chapter of the National Multiple Sclerosis Society. With Joni's approval, I put my money where my mouth was in acknowledging the honor with a gift of a million dollars to the organization.

A few years ago, McDonald's operators in Philadelphia helped establish one of the most useful benevolent programs I know about. In cooperation with the Philadelphia Eagles football team, they set up a home away from home for parents of children who are being treated at Philadelphia Children's Hospital, and they called it Ronald McDonald House. I attended the opening and thought it was great.