The business world is very interesting in that mostly, it is not those with the ideas or those who began a business that benefit the most from it. This is true in the case of Richard and Maurice McDonald whose names might not ring any bells in America, let alone the world. However, the mention of the name McDonald’s fast-food certainly would be recognized all over the world. Known as the McDonald Brothers, they were visionary and revolutionary entrepreneurs who were way ahead of their time.
They revolutionized the way that very busy workers were nourished and fed when they are away from home. The brothers having failed in a few businesses earlier, realized that the only business that flourished in their hometown while they were experiencing challenges was that of a hamburger shop which seemed to make profit all year round; so in 1937 they opened their own hamburger shop in Monrovia, California in the United States, but introduced a concept that was totally strange to patrons of restaurants at the time. The brothers are the founders of the very popular fast-food chain and conglomerate that we call McDonalds today.
Who Are The McDonald Brothers?
Maurice McDonald was born in Manchester, New Hampshire on November 26, 1902, while his younger brother Richard McDonald was born in the same town on February 20, 1909. They grew up in a very humble home where their father, Patrick McDonald worked in a shoe factory as a shift manager; he was barely able to meet the needs of his family while he was working, but after putting in over 4 decades of work in the shoe factory, he was laid off and life became very tough for the family.
The brothers must have learnt very valuable lessons from the travails of their father in his latter life, and they decided to take their future into their own hands and go into business.
What Happened to Them and Their Business?
The McDonald brothers had a clear dream for their future, they wanted to be millionaires by the time they turned 50, and they knew working for someone else would not get them there, so they left their hometown after high school and went into business.
Their first business was operating a movie theater which failed because of the great depression at the time, so they sold it off and opened a barbecue shop – because they realized that the food business was the only thriving business in their neighborhood.
By 1940, the brothers obtained a loan from the Bank of America to build a new and bigger food stand in San Bernardino, California and soon after overcoming some initial challenges, they were making good money. The brothers developed a system they called the “Speedee Service System”, which was a well orchestrated process that guaranteed that burgers and fries would be ready in 30 seconds; this system today is what has become the “fast food” concept.
In 1948, the brothers came up with a plan to focus only on their products with the highest demands – French fries, Hamburger and Milkshakes, and re-designed their production processes to be even more efficient. They tried to expand their business concepts and model through franchising, but we’re not successful at it.
Sometime in the early 1950s the McDonald brothers ordered for 6 (later increased to 8) milkshake machines – an order to be filled by a “hustling” salesman named Ray Kroc. The brothers gave Ray a tour of their San Bernardino shop and he was intrigued by the amazing concept the brothers had put in place and somehow became fixated or saw an opportunity to expand the business, which unfortunately the brothers never had in them.
Ray convinced the brothers to give him the franchise of their entire business concept so he can expand the McDonald’s Fast Food business all over America; the brothers agreed to the deal which would have the franchiser take a 1.9% “cut” of Gross Sales of the Franchise outlet – while paying the McDonald brother a 0.5% Royalty from it.
The arrangement had its challenges but it worked well for both parties, until Ray Kroc “had” a brilliant idea to venture into real estate and own the land upon which future franchise outlets would be built – which guaranteed him rent and real estate holding; this idea turned Ray Kroc – the franchisee into a wealthy man who was able to buy the McDonald’s company in its entirety from the brothers in 1961 for $ 2.7 million.
The brothers and Kroc had a fallout towards the end of their business agreement and buyout, and it is believed that while selling the business to Ray Kroc, the brothers agreed to a gentlemanly “handshake” agreement which would have the brothers receive 0.5% Royalty paid annually (which some believe would have amounted to $ 300 million by now), but Kroc never honored the agreement – which could not be proved anyway.
The McDonald Brothers Net Worth
After they sold the company to Ray Kroc, the brothers maintained control over the original San Bernardino shop – which was eventually run out of business a few years later by one of Ray Kroc’s McDonald’s, built just a few meters from it.
The brothers retired back to their hometown, and their net worth individually was said to be between $100,000 to $ 1.8 million as at the time of their deaths; Maurice died on December 11, 1971 while Richard died on July 14, 1998.
Ray Kroc on the other hand, died on January 14, 1984 with a net worth of $600 million, leaving his business and estate to his wife, Marilyn.