McDonald's: No Longer the Great American Meal

The two brothers opened a drive-in restaurant in a little known town called San Bernardino, California, in 1937. Drive-ins were a relatively new concept at that time. To improve the restaurant business, the brothers invented a revolutionary new concept called "self-service." They did away with the carhops (waiters who served the customers) and reduced their menu from 25 items to just 9: hamburger, cheeseburger, three soft-drink flavors, milk, coffee, potato chips and pie. French-fries and milkshakes were later added to the list. The brothers designed their kitchen for mass production, with assembly line procedures. The restaurant was octagonal, a deviation from the normal practice. The prices were kept low - 15 cents for a burger, and 10 cents for fries.

By the mid-1950s, the restaurant's revenues had risen to $350,000. As word of their success spread, franchisees started showing interest. The first franchisee was Neil Fox, a gasoline retailer, who set up his drive-in in Phoenix, Arizona in 1952. His restaurant was located in a gleaming red and white tiled rectangular building. Like the original restaurant, glass construction was used from counter to the roof, and the kitchen was exposed to the customer's view. The most distinctive feature of the building was its two bright yellow arches, which later evolved into a new symbol for McDonald's. (Refer Figure I) The franchising system, however, failed mainly because of two reasons. The McDonald brothers observed very transparent business practices...