WEBVTT - Finding Grace in a Burger Bun: An Incrediburgible Quest 

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<v Speaker 1>Pushkin with jerky movements.

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<v Speaker 2>A golden droid walks up to the counter of a

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<v Speaker 2>burger restaurant. He turns to his companion, who's lagging behind

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<v Speaker 2>R two D two harry On says Crepo. At the counter,

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<v Speaker 2>c Trepo asks for a Star Wars poster. The smiling

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<v Speaker 2>young server explains that if he buys a large Coca

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<v Speaker 2>Cola for forty nine cents, the posters free. The year

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<v Speaker 2>is nineteen seventy seven, and Star Wars is a sensation

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<v Speaker 2>in the nation's cinemas. Nowadays, we expect any major movie

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<v Speaker 2>to have a tie in with a fast food chain,

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<v Speaker 2>but in nineteen seventy seven that idea was very new.

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<v Speaker 2>The burger restaurant go on, have a guess. I'm going

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<v Speaker 2>to guess that your guess was McDonald's, But no, the

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<v Speaker 2>advert was for burger Chef. You've never heard of burger Chef.

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<v Speaker 2>For a while, it was almost as big as McDonald's

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<v Speaker 2>and in many ways more innovative. Burger Chef had the

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<v Speaker 2>big Chef before McDonald's had the Big Mac. Burger Chef

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<v Speaker 2>had the fun meal before McDonald's had the Happy Meal.

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<v Speaker 2>When McDonald's introduced the Happy Meal, Burger Chef sued, saying

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<v Speaker 2>they'd ripped off the idea where McDonald's had its clown Ronald,

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<v Speaker 2>Burger Chef had a jocular cartoon chef with a chirpy

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<v Speaker 2>teenage sidekick.

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<v Speaker 1>What a surprise prize.

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<v Speaker 3>Only incredib burgable.

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<v Speaker 2>If you'd wanted to get into the hamburger business in

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<v Speaker 2>the United States in the nineteen sixties, you might well

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<v Speaker 2>have chosen to buy a franchise from Burger Chef, not McDonald's.

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<v Speaker 2>And when Star Wars fans flocked to your restaurant to

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<v Speaker 2>buy large Coca colas, you'd have felt pretty happy about

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<v Speaker 2>that decision. If someone had told you that Burger Chef

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<v Speaker 2>was soon to disappear, you might have found that well incrediburgable.

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<v Speaker 2>In the advert, C three PO and R two D

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<v Speaker 2>two excitedly unroll the poster of themselves. Then a chill

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<v Speaker 2>descends as the sound of heavy mechanical breathing fills the restaurant.

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<v Speaker 2>C three PO glances towards the doorway and sees Darth Vader.

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<v Speaker 1>Says, C three, I think we'd better leave.

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<v Speaker 2>In Star Wars, the Rebel Alliance takes on the Empire.

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<v Speaker 2>It's a story of conflict between two ways of life.

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<v Speaker 2>One side cares about self determination, the other side values

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<v Speaker 2>conformity and control. This is a similar story about burghers.

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<v Speaker 2>On one side is McDonald's, on the other side the McDonald's.

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<v Speaker 2>I'm Tim Harford and you're listening to cautionary tales. San Bernardino, California,

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<v Speaker 2>was a fast growing town in the nineteen forties, fifty

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<v Speaker 2>miles east of Los Angeles on Route sixty six, at

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<v Speaker 2>the edge of the Mohave Desert, on the corner of

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<v Speaker 2>fourteenth and East Streets. Dick and Mack McDonald and a restaurant.

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<v Speaker 2>It was a small, octagonal building with a huge parking lot,

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<v Speaker 2>enough space for one hundred and twenty five cars. Waitresses

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<v Speaker 2>known as car hops shuttled back and forth between the

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<v Speaker 2>cars and the restaurant, taking orders, bringing food, returning the

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<v Speaker 2>empty plates. Dick and Mack served a wide ranging menu,

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<v Speaker 2>but their star attraction was the barbecue ribs cooked over

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<v Speaker 2>hickory chips, specially shipped in from Arkansas. The restaurant did well,

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<v Speaker 2>Dick and Mack bought a house on the hill. Once

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<v Speaker 2>a year, they each paid a visit to the town's

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<v Speaker 2>Cadillac dealer to buy a brand new Cadillac, trading in

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<v Speaker 2>the Cadillacs they'd bought the previous year. These year old

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<v Speaker 2>Cadillacs never had many miles on the clock because the

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<v Speaker 2>McDonald brothers never ventured far from San Bernardino. They liked

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<v Speaker 2>it there. Other people liked it too. The town's population

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<v Speaker 2>was growing quickly and its demographics were changing. There were

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<v Speaker 2>more young families with little kids looking for a friendly

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<v Speaker 2>place to eat. But Dick and mack saw that those

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<v Speaker 2>families weren't eating at McDonald's because it had acquired a

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<v Speaker 2>reputation as a CD teenage hangout. The car hops flirted

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<v Speaker 2>with the customers, and those teenage customers were annoyingly careless.

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<v Speaker 2>They kept breaking croc and losing cutlery. Dick and mac

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<v Speaker 2>decided to reinvent themselves. They wanted to come up with

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<v Speaker 2>a different kind of restaurant, one that would be more

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<v Speaker 2>attractive for families, one that would need fewer staff to run.

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<v Speaker 2>They analyzed their sales. In their advertising. They'd always made

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<v Speaker 2>a big thing about their Arkansas hickory barbecue, but they

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<v Speaker 2>had to admit that their barbecue ribs weren't actually that popular.

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<v Speaker 2>Mostly they sold hamburgers, so what had they sold only hamburgers.

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<v Speaker 2>Dick and Mac closed their restaurant for three months and

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<v Speaker 2>completely revamped it. Out with the barbecue pit, in with

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<v Speaker 2>specially designed grills optimized for one job, rilling hamburgers. Out

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<v Speaker 2>with the crockery and cutlery, in with disposable paper cups

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<v Speaker 2>and wrappers, out with the car hops. Now customers would

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<v Speaker 2>line up at the windows of the restaurant to collect

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<v Speaker 2>their food themselves, and they wouldn't have to wait long

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<v Speaker 2>for their food because it could all be efficiently pre made.

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<v Speaker 2>Hamburgers with onions, pickles, ketchup and mustard, boxes of fries

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<v Speaker 2>and pop apple pilies. Wash it down with a soda,

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<v Speaker 2>a milkshake or a coffee.

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<v Speaker 3>That was it.

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<v Speaker 2>That was the menu, simple, efficient quick. The brothers put

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<v Speaker 2>up a sign advertising their speedy service system and reopen

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<v Speaker 2>for business. It went disastrously. Sales were just a fifth

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<v Speaker 2>of what they'd been before. Former customers came by asking

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<v Speaker 2>when they'd go back to how the restaurant used to be.

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<v Speaker 2>Fired car hops said, when you do, can I my

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<v Speaker 2>job back? But the brothers persisted and word began to spread.

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<v Speaker 2>The hamburgers were cheap, just fifteen cents, but they didn't

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<v Speaker 2>taste you. They tasted good. The fries were fantastic, And

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<v Speaker 2>this idea of going up to the window to order

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<v Speaker 2>food instead of having car hops take your order. It

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<v Speaker 2>turned out that one particular type of customer loved that idea,

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<v Speaker 2>little kids. An employee recalls how the kids would walk

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<v Speaker 2>up to the window, clutching a handful of coins and

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<v Speaker 2>place their order, feeling all grown up and independent, with

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<v Speaker 2>a quick glance back to the car, where Mum and

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<v Speaker 2>Dad would smile their encouragement. Before long, the parking lot

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<v Speaker 2>was full again. The ques of the windows were long

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<v Speaker 2>and fast moving. Rival restauranteurs started to wonder how the

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<v Speaker 2>McDonald brothers were serving so many customers so quickly. It

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<v Speaker 2>wasn't hard for them to find out.

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<v Speaker 3>The store was all glass.

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<v Speaker 2>We were in a fish ball, recalls Dick McDonald. The

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<v Speaker 2>whole operation was on public view. All that specialized equipment

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<v Speaker 2>that Dick and mac had had custom made for Lazy

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<v Speaker 2>Susan where twenty four buns at a time could be

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<v Speaker 2>speedily dressed with condiments, the ketchup dispenser that squeezed out

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<v Speaker 2>the exact same sized blob of ketchup every time and

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<v Speaker 2>the specialized staff. Two men doing nothing but fry fries.

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<v Speaker 2>Two more doing nothing but make milkshakes on the multi

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<v Speaker 2>mixer machines.

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<v Speaker 3>We couldn't conceal what we were doing, so we would

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<v Speaker 3>talk to anyone who had questions. They would come in

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<v Speaker 3>with paper and pens and copy the layout, and my

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<v Speaker 3>brother and I would la.

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<v Speaker 2>The brothers answered every question, but some people weren't satisfied

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<v Speaker 2>with sketches of the layout and casual conversations with Dick

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<v Speaker 2>and Mack. They wanted more detail, and they'd pay for it.

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<v Speaker 2>Dick and Mack half heartedly put together a package, a

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<v Speaker 2>fifteen page description of their speedy service system, their architect's

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<v Speaker 2>drawings of their building, and a one week loan of

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<v Speaker 2>an employee who knew how everything worked. They'd offer to

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<v Speaker 2>sell you this one off package, but only if you

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<v Speaker 2>absolutely insisted. When one woman asked about it, Dick advised

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<v Speaker 2>her to open a nice little dress shop instead. It

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<v Speaker 2>wouldn't work like that.

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<v Speaker 3>Today.

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<v Speaker 2>Fast food restaurants are often part of big chains and

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<v Speaker 2>run as franchises, and today's franchising arrangements look very different

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<v Speaker 2>from anything Dick and Mac had imagined their long term

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<v Speaker 2>relationships with mutual obligations, support from head office in exchange

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<v Speaker 2>for a percentage of sales, and strict procedures to protect

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<v Speaker 2>the brand. Dick and Mack had no interest in spreading

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<v Speaker 2>their brand beyond the corner of fourteenth and E Streets.

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<v Speaker 2>They assumed that anyone who bought their package would want

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<v Speaker 2>to put their own spin on their ideas. When one

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<v Speaker 2>man from another state said that he'd call his business

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<v Speaker 2>McDonald's two, Dick.

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<v Speaker 3>Was puzzled, what the hell for?

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<v Speaker 2>One day, a wealthy corporation approached the McDonald brothers with

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<v Speaker 2>a proposal. They wanted to hire Dick and Mac to

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<v Speaker 2>open a chain of McDonald's restaurants all across California. Dick

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<v Speaker 2>and Mac discussed it briefly. They hated the idea. Mack complained, We'd.

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<v Speaker 4>Be on the road all the time in motels looking

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<v Speaker 4>for locations. I can just see one hell of a headache.

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<v Speaker 2>Why bring on the headache when they already had a

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<v Speaker 2>lifestyle they enjoyed.

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<v Speaker 4>We were having a lot of fun doing what we

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<v Speaker 4>wanted to do.

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<v Speaker 2>Sure, a chain of restaurants might make them a fortune,

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<v Speaker 2>but what could they do with a fortune. They already

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<v Speaker 2>earned more money than they could imagine how to spend.

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<v Speaker 2>There's only so often you can buy a new Cadillac.

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<v Speaker 2>They didn't have kids to pass a fortune onto.

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<v Speaker 4>We'd be leaving it to a church or something, and

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<v Speaker 4>we didn't go to church.

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<v Speaker 2>The brothers turned the corporation down. One day in nineteen

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<v Speaker 2>fifty four, a man turned up at the brother's restaurant

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<v Speaker 2>and introduced.

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<v Speaker 1>Himself, Ray Kroc, a.

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<v Speaker 2>Salesman from the multi mixer company that made their milkshake machines.

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<v Speaker 2>Kroc was in his early fifties but brimming with youthful energy.

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<v Speaker 1>Kroc asked them.

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<v Speaker 3>Why don't you open a series of units like this?

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<v Speaker 3>It will be a gold mine for you and for

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<v Speaker 3>me too, because everyone would boost my multi mixer sales.

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<v Speaker 3>What do you say?

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<v Speaker 2>Dick and Mac sighed inwardly. Another proposal they'd have to

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<v Speaker 2>turn down. But Ray Kroc wasn't going to take no

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<v Speaker 2>for an answer. Cautionary tales will be back in a moment.

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<v Speaker 2>All work and no play makes Jack a dull boy,

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<v Speaker 2>so the saying goes. Ray Kroc never understood that saying

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<v Speaker 2>surely work is playing. As a teenager, Kroc recalls in

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<v Speaker 2>his autobiography, Grinding it out. He worked in a grocery store,

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<v Speaker 2>a music store, a drug store, and a lemonade stand.

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<v Speaker 3>I got as much pleasure out of work as I

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<v Speaker 3>did from playing baseball.

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<v Speaker 1>To put it in another way, Kroc says.

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<v Speaker 3>Work is the meat in the hamburger of life.

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<v Speaker 5>Kroc got a job as a paper cup salesman. I

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<v Speaker 5>don't know what appealed to me so much about paper cups.

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<v Speaker 5>Perhaps it was because they were so innovative and upbeat,

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<v Speaker 5>but I sensed from the outset that paper cups were

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<v Speaker 5>part of the way America was headed.

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<v Speaker 2>After a long, hard day of pounding the streets selling

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<v Speaker 2>paper cups, Ray Kroc wanted to do only one thing

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<v Speaker 2>more work. He spent his evenings in the studio of

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<v Speaker 2>his local radio station, working as a piano player until

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<v Speaker 2>two am. Kroc's wife never got to see him. She

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<v Speaker 2>wasn't happy. When he describes this in his book, you

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<v Speaker 2>can almost hear his begrudging tone as he responds to

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<v Speaker 2>a prompt from his ghostwriter.

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<v Speaker 3>Looking back on it now, I guess it was kind

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<v Speaker 3>of unfair.

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<v Speaker 1>But in the next breath, he's justifying himself.

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<v Speaker 3>I was driven by ambition. I hated to be idle

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<v Speaker 3>for a minute.

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<v Speaker 2>Kroc had chosen a fast growing industry.

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<v Speaker 3>The ten years between nineteen twenty seven and nineteen thirty

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<v Speaker 3>seven were a decade of destiny for the paper cup industry.

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<v Speaker 2>Still, though, there's always a chance that an even better

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<v Speaker 2>opportunity will come along. In the course of selling paper cups,

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<v Speaker 2>Kroc encounters the multi mixer. This is going to be huge.

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<v Speaker 2>He has to get into the milkshake machine business. He

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<v Speaker 2>quits his steady job at the paper cup company. His

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<v Speaker 2>wife isn't happy.

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<v Speaker 4>You're thirty five years old and you're going to start

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<v Speaker 4>all over again as if you were twenty.

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<v Speaker 3>You just have to trust my instincts.

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<v Speaker 2>He neglects to mention that he's mortgaged their house so

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<v Speaker 2>he can buy into the multi mixer company. When she

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<v Speaker 2>finds out, she's furious.

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<v Speaker 3>She couldn't seem to handle.

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<v Speaker 2>It, Crock recalls sounding slightly bemused. He tells her that

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<v Speaker 2>obviously she'll have to come and work for him in

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<v Speaker 2>the multi mixer business to give him the best chance

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<v Speaker 2>of making it a success. Absolutely not, she says.

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<v Speaker 3>I felt betrayed. I just couldn't believe she led me

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<v Speaker 3>down like that.

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<v Speaker 2>Kroc throws himself into the task of selling multi mixers.

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<v Speaker 2>People are amazed at his energy. At trade events, He's

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<v Speaker 2>up until three am schmoozing clients, then appears at breakfast,

0:17:32.050 --> 0:17:35.330
<v Speaker 2>bright eyed and bushy tailed, eager for a new day.

0:17:36.330 --> 0:17:40.770
<v Speaker 2>What's his secret, they ask? He tells them, I sleep bizarre.

0:17:40.770 --> 0:17:48.810
<v Speaker 2>As I work. In the early nineteen fifties, Kroc notices

0:17:48.850 --> 0:17:51.890
<v Speaker 2>that he's getting more and more calls from people who

0:17:51.890 --> 0:17:55.130
<v Speaker 2>want to buy multi mixers because they've seen them being

0:17:55.250 --> 0:18:00.530
<v Speaker 2>used at a Hamburger joint in San Bernardino. Kroc is intrigued.

0:18:01.170 --> 0:18:05.410
<v Speaker 2>What's so special about this place? He flies out to

0:18:05.450 --> 0:18:12.050
<v Speaker 2>California to investigate. McDonald's isn't yet open when he arrives

0:18:12.130 --> 0:18:16.770
<v Speaker 2>and parks up, and his first impression is underwhelming. It's

0:18:16.890 --> 0:18:21.930
<v Speaker 2>just a small, ordinary, octagonal building. He watches from his

0:18:22.130 --> 0:18:24.970
<v Speaker 2>hired car as the employees file in.

0:18:26.130 --> 0:18:30.890
<v Speaker 3>Are men dressed in spiffy white shirts and trousers and

0:18:31.050 --> 0:18:32.090
<v Speaker 3>white paper hats.

0:18:33.650 --> 0:18:38.850
<v Speaker 2>I like that, He watches as the parking lot fills

0:18:38.930 --> 0:18:43.010
<v Speaker 2>up and long queues form of the window. More and

0:18:43.250 --> 0:18:48.370
<v Speaker 2>more intriguing, Kroc gets out of his car and strikes

0:18:48.410 --> 0:18:52.530
<v Speaker 2>up conversations with the customers. He approaches an attractive young lady,

0:18:53.130 --> 0:18:55.370
<v Speaker 2>a strawberry blonde, and.

0:18:55.330 --> 0:18:59.370
<v Speaker 3>Asks, how often do you come here? Anytime I'm in

0:18:59.410 --> 0:19:03.450
<v Speaker 3>the neighborhood, and that's as often as possible because my

0:19:03.690 --> 0:19:06.250
<v Speaker 3>boyfriend lives here.

0:19:06.850 --> 0:19:10.370
<v Speaker 2>Kroc gets the hint she's a sumed he's a clumsy,

0:19:10.490 --> 0:19:14.450
<v Speaker 2>middle aged pickup artist that he doesn't mind the brush off.

0:19:15.250 --> 0:19:18.810
<v Speaker 3>It was not her sex appeal, but the obvious relish

0:19:18.970 --> 0:19:22.530
<v Speaker 3>with which she devoured the hamburger that made my pulse

0:19:22.610 --> 0:19:25.450
<v Speaker 3>begin to hammer with excitement.

0:19:26.850 --> 0:19:30.610
<v Speaker 2>Kroc peers into the fishbowl, watching the men in their

0:19:30.650 --> 0:19:38.810
<v Speaker 2>spiffy white shirts at work. He's enchanted, so simple, so efficient.

0:19:40.010 --> 0:19:43.970
<v Speaker 2>That night, Kroc lies in bed in his hotel.

0:19:43.690 --> 0:19:51.050
<v Speaker 3>Room, visions McDonald's restaurants dotting crossroads all over the country

0:19:51.170 --> 0:19:52.770
<v Speaker 3>paraded through my brain.

0:19:56.370 --> 0:19:59.850
<v Speaker 2>The next day, he approaches the McDonald brothers with his pitch.

0:20:01.010 --> 0:20:03.570
<v Speaker 3>I've been in the kitchens of a lot of restaurants

0:20:03.770 --> 0:20:08.570
<v Speaker 3>selling multi mixures, and I have never seen anything to

0:20:08.690 --> 0:20:13.610
<v Speaker 3>equal the potential of this place of yours. Why don't

0:20:13.610 --> 0:20:16.770
<v Speaker 3>you open a series of units like this? It would

0:20:16.770 --> 0:20:19.490
<v Speaker 3>be a gold mine for you and for me too,

0:20:20.370 --> 0:20:24.890
<v Speaker 3>because everyone would boost my multi mixer sales. What do

0:20:24.930 --> 0:20:25.490
<v Speaker 3>you say.

0:20:28.370 --> 0:20:34.690
<v Speaker 1>Silence? Kroc is puzzled. Has he said something wrong?

0:20:36.170 --> 0:20:41.770
<v Speaker 2>Mac McDonald points to a house on a nearby hill.

0:20:41.970 --> 0:20:45.050
<v Speaker 4>See that big white house with the wide front porch.

0:20:45.770 --> 0:20:49.570
<v Speaker 4>That's our house, and we love it. We sit out

0:20:49.650 --> 0:20:52.450
<v Speaker 4>on the porch in the evenings and watch the sunset

0:20:52.650 --> 0:20:54.330
<v Speaker 4>and look down on our place here.

0:20:55.090 --> 0:20:55.890
<v Speaker 3>It's peaceful.

0:20:56.690 --> 0:20:59.770
<v Speaker 4>We don't need any more problems. We're in a position

0:20:59.810 --> 0:21:03.450
<v Speaker 4>to enjoy life now, and that's just what we intend

0:21:03.490 --> 0:21:03.810
<v Speaker 4>to do.

0:21:07.570 --> 0:21:13.170
<v Speaker 2>Krook is totally throne. He can't comprehend what the brothers

0:21:13.170 --> 0:21:13.690
<v Speaker 2>are saying.

0:21:15.250 --> 0:21:20.730
<v Speaker 3>Their approach was utterly foreign to me. It took me

0:21:20.810 --> 0:21:22.970
<v Speaker 3>a few minutes to reorganize my thinking.

0:21:24.370 --> 0:21:29.450
<v Speaker 2>Once he's reorganized his thinking, Croc suggests they get someone

0:21:29.450 --> 0:21:37.970
<v Speaker 2>else to open restaurants for them. Maybe, they say, but who, well,

0:21:39.610 --> 0:21:48.530
<v Speaker 2>what about me? That year nineteen fifty four, two thousand

0:21:48.610 --> 0:21:53.090
<v Speaker 2>miles away in Indianapolis, another pair of brothers were cooking

0:21:53.170 --> 0:21:57.450
<v Speaker 2>up an idea for a restaurant chain. Frank and Don

0:21:57.610 --> 0:22:02.970
<v Speaker 2>Thomas's family business made fast food equipment, the Easy Way

0:22:03.010 --> 0:22:07.850
<v Speaker 2>frozen custard machine, the Sanny served milkshake machine, and the

0:22:08.010 --> 0:22:12.290
<v Speaker 2>Insta broiler, which flame grilled hamburgers on a conveyor belt.

0:22:13.170 --> 0:22:16.970
<v Speaker 2>They decided to demonstrate their machines to potential customers by

0:22:17.010 --> 0:22:21.770
<v Speaker 2>opening a showcase restaurant. Word got around that the burgers

0:22:21.770 --> 0:22:25.690
<v Speaker 2>and milkshakes in this showcase restaurant were the best in town.

0:22:27.090 --> 0:22:29.850
<v Speaker 2>Trade customers came by to check out the equipment, but

0:22:29.970 --> 0:22:33.770
<v Speaker 2>were even more impressed by the queues of eager locals.

0:22:35.010 --> 0:22:38.410
<v Speaker 2>Just like the McDonald brothers, the Thomas Brothers discovered that

0:22:38.530 --> 0:22:42.530
<v Speaker 2>many wannabe fast food entrepreneurs were in the market for

0:22:42.610 --> 0:22:47.890
<v Speaker 2>a complete restaurant concept. They didn't just want equipment, they

0:22:47.890 --> 0:22:52.130
<v Speaker 2>wanted restaurant plans and working procedures, even a brand name.

0:22:53.290 --> 0:22:56.570
<v Speaker 2>But Thomas's got to work on a concept they could franchise.

0:22:57.410 --> 0:23:09.210
<v Speaker 2>They called it Burger Chef Ray Kroc drives away from

0:23:09.250 --> 0:23:13.050
<v Speaker 2>San Bernardino with a signed contract with the McDonald brothers

0:23:13.090 --> 0:23:16.610
<v Speaker 2>in his pocket and joy in his heart.

0:23:17.570 --> 0:23:20.890
<v Speaker 3>I was fifty two years old. I had diabetes and

0:23:21.050 --> 0:23:24.650
<v Speaker 3>incipient arthritis. I had lost my gallbladder and most of

0:23:24.690 --> 0:23:28.930
<v Speaker 3>my thyroid gland, but I was convinced that the best

0:23:29.730 --> 0:23:30.370
<v Speaker 3>was ahead of me.

0:23:33.090 --> 0:23:36.010
<v Speaker 2>Kroc tells his wife that he's agreed to set up

0:23:36.010 --> 0:23:45.410
<v Speaker 2>a Hamburger chain. He's starting all over again again. She's incandescent.

0:23:47.210 --> 0:23:50.130
<v Speaker 2>I had no time to bother with emotional stress. Though

0:23:51.130 --> 0:23:54.890
<v Speaker 2>I had to find a site for my first McDonald's.

0:23:56.770 --> 0:24:00.330
<v Speaker 2>It wasn't a headache for Ray Kroc to schlep around

0:24:00.330 --> 0:24:05.050
<v Speaker 2>the country, sleeping in motels, assessing the market potential of

0:24:05.210 --> 0:24:06.370
<v Speaker 2>various crossroads.

0:24:06.690 --> 0:24:08.090
<v Speaker 1>He adored it.

0:24:09.170 --> 0:24:14.690
<v Speaker 3>Finding locations for McDonald's is the most creatively fulfilling thing

0:24:14.930 --> 0:24:16.650
<v Speaker 3>I can imagine.

0:24:17.330 --> 0:24:20.890
<v Speaker 2>Are there schools and churches nearby? He hangs out in

0:24:20.970 --> 0:24:22.810
<v Speaker 2>local shops? What are the people like?

0:24:24.290 --> 0:24:25.370
<v Speaker 1>At two a m.

0:24:26.010 --> 0:24:30.330
<v Speaker 2>He sifts through the garbage of rival Hamburger joints. By

0:24:30.450 --> 0:24:33.410
<v Speaker 2>counting the empty meat boxes, they'll get a sense of

0:24:33.450 --> 0:24:38.810
<v Speaker 2>how much business they're do. Kroc obsesses over fast food

0:24:38.890 --> 0:24:45.450
<v Speaker 2>manushie fries, He decrees must be precisely nine thirty seconds

0:24:45.490 --> 0:24:50.650
<v Speaker 2>of an inch thick beef patties must not exceed nineteen

0:24:50.770 --> 0:24:51.570
<v Speaker 2>percent fat.

0:24:52.810 --> 0:24:56.850
<v Speaker 3>Is it any more unusual to find grace in the

0:24:56.970 --> 0:25:01.890
<v Speaker 3>texture and softly curved sill web of a Hamburger bun

0:25:02.250 --> 0:25:07.050
<v Speaker 3>than to reflect lovingly on the colors in a butterfly's wing?

0:25:10.250 --> 0:25:19.090
<v Speaker 2>Well, yes, Ray, it kind of is. Kroc works obsessively

0:25:19.210 --> 0:25:24.810
<v Speaker 2>to recruit franchisees. He opens hundreds of McDonald's restaurants, but

0:25:24.890 --> 0:25:31.650
<v Speaker 2>he's only just keeping ahead of Burger Chef. In nineteen

0:25:31.730 --> 0:25:36.130
<v Speaker 2>sixty seven, the Thomas Brothers decide to cash in. They

0:25:36.210 --> 0:25:40.490
<v Speaker 2>sell Burger Chef to a mega food conglomerate. The new

0:25:40.610 --> 0:25:45.770
<v Speaker 2>owners have big ambitions to leave McDonald's in the dust.

0:25:47.970 --> 0:25:58.970
<v Speaker 2>Cautionary tales will be back in a moment. Burger Chef's

0:25:59.050 --> 0:26:04.050
<v Speaker 2>new owners promptly commission a snazzy new logo to refresh

0:26:04.090 --> 0:26:08.450
<v Speaker 2>the brand's identity. They introduced the fun Meal and a

0:26:08.450 --> 0:26:12.850
<v Speaker 2>whole cart of kid friendly cartoon characters to interact with

0:26:12.930 --> 0:26:18.970
<v Speaker 2>their jocular Chef and his teenage sidekick. There's the Witch, Cackleberger.

0:26:22.490 --> 0:26:25.250
<v Speaker 4>You that traffic over the airport was murder?

0:26:25.490 --> 0:26:26.690
<v Speaker 3>Or what brings you in tonight?

0:26:26.770 --> 0:26:27.410
<v Speaker 1>Cackle Berger?

0:26:27.770 --> 0:26:39.090
<v Speaker 2>Yeah, the Vampire count Fang BURGERA.

0:26:36.170 --> 0:26:37.090
<v Speaker 5>I'm happy?

0:26:37.570 --> 0:26:38.610
<v Speaker 1>What're you going to forget?

0:26:38.770 --> 0:26:40.730
<v Speaker 4>At Burger Shape.

0:26:40.410 --> 0:26:44.970
<v Speaker 2>And the Magician the Great Burgerini. Then came the Star

0:26:45.050 --> 0:26:51.890
<v Speaker 2>Wars posters. Burger Chef seemed to be on top of

0:26:51.930 --> 0:26:55.810
<v Speaker 2>its game, but other decisions the new owners had made

0:26:56.130 --> 0:26:59.930
<v Speaker 2>were putting Burger Chef on course to hit disaster in

0:27:00.090 --> 0:27:06.570
<v Speaker 2>under twelve parsecs. Those posters were covering up the writing

0:27:06.610 --> 0:27:17.010
<v Speaker 2>on the walls. Why did McDonald's succeed and Burger Chef fail.

0:27:18.050 --> 0:27:22.250
<v Speaker 2>There isn't one simple answer, but a big part of

0:27:22.290 --> 0:27:25.810
<v Speaker 2>the story involves the tension at the heart of the

0:27:25.850 --> 0:27:30.530
<v Speaker 2>franchising relationship and the heart of the Star Wars movies,

0:27:31.450 --> 0:27:37.050
<v Speaker 2>between the individual's urge for self determination and the organization's

0:27:37.130 --> 0:27:47.610
<v Speaker 2>desire for control. In his book An Introduction to Franchising,

0:27:48.410 --> 0:27:53.210
<v Speaker 2>Leicester Business School lecturer Robert Webber calls the franchising relationship

0:27:53.650 --> 0:27:57.530
<v Speaker 2>a kind of halfway house between being an employee and

0:27:57.610 --> 0:28:03.290
<v Speaker 2>a fully standalone business. Like any entrepreneur, a franchisee puts

0:28:03.330 --> 0:28:07.010
<v Speaker 2>their own money on the line. In the nineteen sixties,

0:28:07.170 --> 0:28:10.650
<v Speaker 2>buying a McDonald's or a Burger Ship franchise would have

0:28:10.690 --> 0:28:14.530
<v Speaker 2>cost you around ten thousand dollars. That's about one hundred

0:28:14.530 --> 0:28:18.410
<v Speaker 2>thousand in today's terms, a lot of money, and that's

0:28:18.450 --> 0:28:21.130
<v Speaker 2>before you make all the other investments in setting the

0:28:21.130 --> 0:28:25.730
<v Speaker 2>restaurant up. A franchisee is going to be highly incentivized

0:28:25.770 --> 0:28:29.570
<v Speaker 2>to work hard to get that money back, much more so,

0:28:29.730 --> 0:28:34.770
<v Speaker 2>perhaps than a salaried corporate employee. It's easy to see

0:28:34.850 --> 0:28:39.330
<v Speaker 2>why chains like McDonald's and Burger Chef latched onto franchising

0:28:39.370 --> 0:28:44.770
<v Speaker 2>as a quick way to grow. Franchisees brought money and motivation,

0:28:46.650 --> 0:28:49.970
<v Speaker 2>But what's in it for the franchise e. That's no

0:28:50.170 --> 0:28:54.810
<v Speaker 2>mystery either, says Robert Webber. The greatest benefit to any

0:28:54.930 --> 0:28:59.810
<v Speaker 2>hopeful franchisee is that the business model and commercial concepts

0:29:00.170 --> 0:29:04.730
<v Speaker 2>have been tried and tested. We've seen what would be

0:29:05.050 --> 0:29:09.930
<v Speaker 2>entrepreneurs wanted from McDonald brothers and the Thomas brothers. Information,

0:29:10.770 --> 0:29:14.530
<v Speaker 2>What equipment should I buy? How should I organize my workers?

0:29:15.050 --> 0:29:21.050
<v Speaker 2>That kind of guidance is worth paying for. Dick and

0:29:21.250 --> 0:29:25.130
<v Speaker 2>mac McDonald assumed that everyone who bought information from them

0:29:25.170 --> 0:29:27.370
<v Speaker 2>would want to use it in their own way, give

0:29:27.410 --> 0:29:30.730
<v Speaker 2>their restaurant its own name, experiment with their own menu.

0:29:31.730 --> 0:29:36.570
<v Speaker 2>Ray Kroc's vision of franchising was completely different, as one

0:29:36.650 --> 0:29:40.970
<v Speaker 2>early franchisee found out when Kroc visited his store and

0:29:41.130 --> 0:29:45.130
<v Speaker 2>snapped at an employee to clean his fingernails. Don't you

0:29:45.330 --> 0:29:49.410
<v Speaker 2>start telling my help what to do, the franchisee told Kroc,

0:29:49.850 --> 0:29:53.330
<v Speaker 2>or I'll tell you what you can do. Kroc was

0:29:53.850 --> 0:29:58.490
<v Speaker 2>furious the way he saw it, his franchisees weren't just

0:29:58.730 --> 0:30:04.290
<v Speaker 2>buying information, they were buying reputation, and the only way

0:30:04.330 --> 0:30:08.970
<v Speaker 2>to maintain reputation was to make sure every single franchise

0:30:09.130 --> 0:30:15.770
<v Speaker 2>z was upholding the same standards. In his book McDonald's

0:30:15.770 --> 0:30:21.170
<v Speaker 2>Behind the Arches, John F. Love writes that Kroc demanded

0:30:21.330 --> 0:30:25.210
<v Speaker 2>much more control over the system than other franchisers did.

0:30:25.770 --> 0:30:28.890
<v Speaker 2>If you bought a McDonald's franchise, you'd be sent to

0:30:29.050 --> 0:30:33.570
<v Speaker 2>Hamburger University, where you'd be drilled in French fry thickness

0:30:33.650 --> 0:30:39.370
<v Speaker 2>and beef patty fat content, though possibly not bun silhouette appreciation.

0:30:40.730 --> 0:30:44.890
<v Speaker 2>After that, you'd get regular visits from Kroc's henchmen, who'd

0:30:44.930 --> 0:30:49.170
<v Speaker 2>make sure you were following every instruction in the hundreds

0:30:49.170 --> 0:30:55.250
<v Speaker 2>of pages of the operating manual. For example, pick up

0:30:55.450 --> 0:30:59.170
<v Speaker 2>McDonald's litter within a two block radius of the store.

0:31:00.250 --> 0:31:04.370
<v Speaker 2>One franchisee who'd been neglecting this duty had a Kroc

0:31:04.530 --> 0:31:08.250
<v Speaker 2>henchman march into his office with an armful of empty

0:31:08.290 --> 0:31:09.850
<v Speaker 2>cups and wrappers.

0:31:10.570 --> 0:31:11.530
<v Speaker 1>He dumped them on the.

0:31:11.490 --> 0:31:15.970
<v Speaker 2>Franchise's desk and yelled, how can you let this stuff

0:31:16.010 --> 0:31:21.290
<v Speaker 2>go on your neighbor's lawn. That's the sense in which

0:31:21.330 --> 0:31:26.450
<v Speaker 2>franchisees are more like employees than other entrepreneurs. If you're

0:31:26.490 --> 0:31:29.810
<v Speaker 2>running an independent business, nobody's going to nag you about

0:31:29.850 --> 0:31:34.770
<v Speaker 2>how often you mop your floor. In setting up its

0:31:34.930 --> 0:31:41.890
<v Speaker 2>operating system, says John Love, McDonald's displayed no particular genius,

0:31:42.010 --> 0:31:49.650
<v Speaker 2>just tenacity. They developed standards and enforced standards. As logical

0:31:49.730 --> 0:31:53.850
<v Speaker 2>and basic as that sounds, it was a revolutionary concept

0:31:53.930 --> 0:32:00.530
<v Speaker 2>in food franchising. McDonald's achieved a consistency of service that

0:32:00.730 --> 0:32:08.890
<v Speaker 2>no franchised system had ever before attained. At Burger Chef,

0:32:09.250 --> 0:32:14.010
<v Speaker 2>when the new owners proudly unveiled their snazzy new logo,

0:32:14.410 --> 0:32:18.330
<v Speaker 2>they expected the franchisees to pay to change the signs

0:32:18.330 --> 0:32:22.970
<v Speaker 2>on their restaurants, but their franchise agreements didn't say they

0:32:23.050 --> 0:32:23.370
<v Speaker 2>had to.

0:32:24.330 --> 0:32:25.930
<v Speaker 1>Some did, some didn't.

0:32:27.010 --> 0:32:31.250
<v Speaker 2>Then the new owners announced the new interior design concept

0:32:31.850 --> 0:32:36.450
<v Speaker 2>and asked the franchisees to refit their restaurants. Some did,

0:32:37.250 --> 0:32:42.890
<v Speaker 2>some didn't. Then they changed the logo again. At one point,

0:32:43.090 --> 0:32:47.770
<v Speaker 2>Burger Chefs around the country had four different designs of

0:32:47.930 --> 0:32:54.530
<v Speaker 2>sign and restaurant. Ray Kroc had understood the vital importance

0:32:54.730 --> 0:33:06.090
<v Speaker 2>of consistency and conformity. Burger Chef had not In nineteen

0:33:06.170 --> 0:33:10.570
<v Speaker 2>eighty two, the new owners of burgersh Chef sold off

0:33:10.650 --> 0:33:16.810
<v Speaker 2>the struggling chain to Hardy's. A few stubborn franchisees persisted

0:33:16.850 --> 0:33:20.370
<v Speaker 2>with their version of the Burger Chef brand. The last

0:33:20.690 --> 0:33:28.010
<v Speaker 2>closed their doors in nineteen ninety six. Burger Chef's demise

0:33:28.290 --> 0:33:33.410
<v Speaker 2>shows the biggest downside of buying a franchise. As lecturer

0:33:33.490 --> 0:33:37.970
<v Speaker 2>Robert Webber puts it, the individual franchisee will have virtually

0:33:38.330 --> 0:33:43.370
<v Speaker 2>no power over the most important policy decisions that will

0:33:43.410 --> 0:33:48.490
<v Speaker 2>influence his or her business. Those decisions might be brilliant,

0:33:48.770 --> 0:33:52.170
<v Speaker 2>like the Star Wars tie in, or they might be stupid,

0:33:52.410 --> 0:33:58.330
<v Speaker 2>like the multiple rebrands. Buying a franchise, says Weber, is

0:33:58.410 --> 0:34:02.530
<v Speaker 2>like getting married after a short courtship. But if it

0:34:02.650 --> 0:34:06.770
<v Speaker 2>is a marriage, it's not an equal one. The individual

0:34:06.890 --> 0:34:12.650
<v Speaker 2>franchisee has a hat as much decisions as Missus Kroc.

0:34:18.330 --> 0:34:18.570
<v Speaker 3>Ray.

0:34:18.770 --> 0:34:24.410
<v Speaker 2>Croc's obsession with conformity was driving McDonald's to new heights,

0:34:25.330 --> 0:34:30.330
<v Speaker 2>but Kroc faced a constant source of frustration. The contract

0:34:30.450 --> 0:34:33.890
<v Speaker 2>he had signed with Dick and mac McDonald had been

0:34:33.930 --> 0:34:38.010
<v Speaker 2>so impressed with their San Bernardino restaurant, so eager to

0:34:38.050 --> 0:34:41.170
<v Speaker 2>get the rights to franchise it. He hadn't thought the

0:34:41.250 --> 0:34:45.970
<v Speaker 2>contract through. It said, he needed the brother's written approval

0:34:46.090 --> 0:34:49.370
<v Speaker 2>for major decisions, and they could never be bothered to

0:34:49.410 --> 0:34:52.970
<v Speaker 2>provide it. They were too busy admiring the sunsets.

0:34:53.970 --> 0:34:57.130
<v Speaker 3>The McDonald brothers were simply not on my wavelength at all.

0:34:58.090 --> 0:35:01.850
<v Speaker 3>I was obsessed with making McDonald's the biggest and the best.

0:35:03.210 --> 0:35:09.050
<v Speaker 3>They were content with what they had.

0:35:09.090 --> 0:35:12.650
<v Speaker 2>Besides, he has no choice but to buy the McDonald

0:35:12.770 --> 0:35:16.730
<v Speaker 2>brothers out of their contract. He asks them to name

0:35:16.810 --> 0:35:21.650
<v Speaker 2>their price. Dick and Mac discuss what their contract is worth.

0:35:22.890 --> 0:35:25.730
<v Speaker 2>It gives them the right to half a percent of

0:35:25.810 --> 0:35:29.890
<v Speaker 2>all McDonald's revenue, and at the rate McDonald's is growing,

0:35:30.290 --> 0:35:34.250
<v Speaker 2>the sums involved are soon going to be vast. In

0:35:34.330 --> 0:35:38.090
<v Speaker 2>a few years, they might have who knows five million.

0:35:39.570 --> 0:35:40.890
<v Speaker 2>Mac says to Dick.

0:35:41.650 --> 0:35:44.090
<v Speaker 4>What the hell can we do with five million that

0:35:44.130 --> 0:35:45.330
<v Speaker 4>we can't do now?

0:35:46.770 --> 0:35:50.130
<v Speaker 2>The brothers decide to ask Ray Kroc for a round

0:35:50.410 --> 0:35:54.730
<v Speaker 2>million dollars each after tax. That's about ten million in

0:35:54.770 --> 0:35:57.650
<v Speaker 2>today's money, and far less than they could have got

0:35:57.730 --> 0:36:02.930
<v Speaker 2>if they'd stuck with their contract. Later, Dick McDonald is

0:36:03.050 --> 0:36:08.690
<v Speaker 2>asked if he regrets selling up, not at all, He shrugs.

0:36:09.130 --> 0:36:12.610
<v Speaker 3>Would have wound up in some skyscrapers somewhere with about

0:36:12.890 --> 0:36:17.010
<v Speaker 3>four ulcers.

0:36:17.050 --> 0:36:21.450
<v Speaker 2>Dick and mac McDonald cared about money, but they only

0:36:21.490 --> 0:36:25.650
<v Speaker 2>cared up to a point. Dick remembers struggling through the

0:36:25.690 --> 0:36:30.130
<v Speaker 2>Great Depression and thinking to himself, how marvelous it would

0:36:30.130 --> 0:36:34.330
<v Speaker 2>be never to have to worry about making rent. Having

0:36:34.370 --> 0:36:39.730
<v Speaker 2>achieved that, the brothers cared more about sunsets and cadillacs

0:36:40.210 --> 0:36:43.650
<v Speaker 2>and the freedom to do what they wanted with their restaurant.

0:36:44.570 --> 0:36:48.130
<v Speaker 2>They looked at their community changing and decided to take

0:36:48.170 --> 0:36:53.450
<v Speaker 2>a risk on reinventing themselves. They dreamed up new ideas

0:36:53.530 --> 0:37:02.690
<v Speaker 2>that were so successful they changed the world. The McDonald

0:37:02.730 --> 0:37:06.810
<v Speaker 2>brothers succeeded on their own terms, but in the world

0:37:06.930 --> 0:37:10.850
<v Speaker 2>they helped create. It's become much harder to do what

0:37:10.970 --> 0:37:15.610
<v Speaker 2>they did. Open a restaurant with an experimental concept today,

0:37:15.810 --> 0:37:19.370
<v Speaker 2>and you have to compete with the finely honed operations

0:37:19.410 --> 0:37:25.330
<v Speaker 2>of multiple franchising juggernauts who've all learned lessons from McDonald's.

0:37:26.570 --> 0:37:31.450
<v Speaker 2>According to figures quoted by Robert Webber, independent businesses are

0:37:31.690 --> 0:37:37.490
<v Speaker 2>ten times more likely to fail than franchises. It might

0:37:37.530 --> 0:37:42.650
<v Speaker 2>be romantic to open your own dream restaurant. The pragmatic

0:37:42.730 --> 0:37:53.010
<v Speaker 2>choice is marrying Ray krop. Just as Ray Kropp is

0:37:53.050 --> 0:37:56.610
<v Speaker 2>about to sign the deal buying Dick and Mac out

0:37:56.610 --> 0:38:02.210
<v Speaker 2>of their contract, he notices something missing. The deal doesn't

0:38:02.210 --> 0:38:07.690
<v Speaker 2>mention the brother's original restaurant in San Bernardino. Surely that

0:38:07.770 --> 0:38:12.250
<v Speaker 2>must be included. Oh no, say Dick and Mac. We've

0:38:12.290 --> 0:38:15.530
<v Speaker 2>already promised to give that to two of our loyal employees.

0:38:17.170 --> 0:38:26.370
<v Speaker 3>Oh a goddamn Ratten Trick, I screamed like hell about him.

0:38:26.410 --> 0:38:29.970
<v Speaker 2>Once the deal is signed, the old employees, of course,

0:38:30.130 --> 0:38:32.850
<v Speaker 2>can't call their restaurant McDonald's anymore.

0:38:33.570 --> 0:38:37.130
<v Speaker 1>They give it a new, unique name, The Big.

0:38:37.130 --> 0:38:43.010
<v Speaker 2>M Ray Kroc opens the McDonald's right across the street

0:38:44.290 --> 0:39:02.490
<v Speaker 2>and drives them out of business. This script relied on

0:39:02.570 --> 0:39:06.410
<v Speaker 2>John Love's book about McDonald's Behind the Arches and John

0:39:06.490 --> 0:39:10.890
<v Speaker 2>McDonald's book about Burger Chef Out. For a full list

0:39:10.930 --> 0:39:16.730
<v Speaker 2>of sources, visit Timharford dot com. Cautionary Tales is written

0:39:16.770 --> 0:39:20.130
<v Speaker 2>by me Tim Harford with Andrew Wright, Alice Fines, and

0:39:20.210 --> 0:39:24.090
<v Speaker 2>Ryan Dilly. It's produced by Georgia Mills and Marilyn Rust.

0:39:24.690 --> 0:39:27.410
<v Speaker 2>The sound design and original music are the work of

0:39:27.530 --> 0:39:31.610
<v Speaker 2>Pascal Wise. Additional sound design is by Carlos san Juan

0:39:31.850 --> 0:39:36.810
<v Speaker 2>at Brain Audio. Bend A Dafhaffrey edited the scripts. The

0:39:36.850 --> 0:39:41.250
<v Speaker 2>show features the voice talents of Genevieve Gaunt, Melanie Guttridge,

0:39:41.530 --> 0:39:47.250
<v Speaker 2>Stella Harford, Oliver Hembrough, Sarah Jupp, Massaa Munroe, Jamal Westman

0:39:47.490 --> 0:39:51.050
<v Speaker 2>and rufus Wright. The show also wouldn't have been possible

0:39:51.090 --> 0:39:54.810
<v Speaker 2>without the work of Jacob Weisberg, Greta Cohne, Sarah Nix,

0:39:55.130 --> 0:40:00.090
<v Speaker 2>Eric Sandler, Carrie Brody, Christina Sullivan, Kira Posey, and Owen Miller.

0:40:01.010 --> 0:40:05.410
<v Speaker 2>Cautionary Tales is a production of Pushkin Industries. It's recorded

0:40:05.410 --> 0:40:09.010
<v Speaker 2>at Wardhore Studios in London by Noria Barr and Lucy Ry.

0:40:10.130 --> 0:40:12.930
<v Speaker 2>If you like the show, please remember to share, rate

0:40:13.170 --> 0:40:15.330
<v Speaker 2>and review. It really makes a difference to us and

0:40:15.370 --> 0:40:17.770
<v Speaker 2>if you want to hear the show, add free to

0:40:17.770 --> 0:40:20.330
<v Speaker 2>sign up to Pushkin Plus on the show page on

0:40:20.410 --> 0:40:24.450
<v Speaker 2>Apple Podcasts or at pushkin dot fm, slash plus