The McDonald's 'Beef Fries' Controversy



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Background Note

McDonald's was started as a drive-in restaurant by two brothers, Richard and Maurice McDonald in California, US in the year 1937. The business, which was generating $ 200,000 per annum in the 1940s, got a further boost with the emergence of a revolutionary new concept called 'self-service.' The brothers designed their kitchen for mass production with assembly line procedures. Prices were kept low.

Speed, service and cleanliness became the critical success factors of the business. By mid-1950s, the restaurant's revenues reached $ 350,000. As word of their success spread, franchisees started showing interest. However, the franchising system failed because the McDonald brothers observed very transparent business practices.

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As a consequence, they encouraged imitators who copied their business practices and emerged as competitors. The franchisees also did not maintain the same standards for cleanliness, customer service and product uniformity. At this point, Ray Kroc (Kroc), an exclusive distributor for milkshake machines expressed interest in the McDonald brothers' business. Kroc finalized a deal with the McDonald brothers in 1954....

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