by Ray Kroc
“You’re crazy, or else you think I am,” he protested. “I get the same fifteen cents for a malted if it’s drunk at the counter, so why the hell should I pay a cent and a half for your cup and earn less?”
“You would increase your volume,” I argued. “You could have a special area at the counter where you would sell these things, put covers on them, and take them and the same vanilla wafers or crackers you serve with them at the fountain and drop them in a bag to take out.”
Mac’s face got redder than usual at that and he rolled his eyes toward heaven as if pleading to be delivered from this madman. “Listen, how can I possibly make a profit if I go to this extra expense? Then you want me to waste my clerk’s time putting covers on drinks and stuffing them in bags? You are dreaming.”
One day I said, “Mac, the only way in this world that you can increase your soda fountain volume is to sell to people who don’t take up a stool. Look, I’ll tell you what I’m gonna do. I will give you 200 or 300 containers with covers, however many you need to try this for a month in your store down the street. Now most of your takeout customers will be Walgreen employees from headquarters here, and you can conduct your own marketing survey on them and see how they like it. You get the cups free, so it’s not going to cost you anything to try it.”
Finally he agreed. I brought him the cups, and we set the thing up at one end of the soda fountain. It was a big success from the first day. It wasn’t long before McNamarra was more excited about the idea of takeouts than I was. We went in to see Fred Stoll, the Walgreen purchasing agent, and set up what was to be a highly satisfactory arrangement for both of us. The best part of it for me personally was that every time I saw a new Walgreen’s store going up it meant new business. This sort of multiplication was clearly the way to go. I spent less and less time chasing pushcart vendors around the West Side and more time cultivating large accounts where big turnover would automatically winch in sales in the thousands and hundreds of thousands. I went after Beatrice Creamery, Swift, Armour, and big plants with in-factory food service systems such as U.S. Steel. I sold them all, and my success brought me more territory to cover and more possibilities.
One day an order was sent down from Lily Tulip’s headquarters in New York that because of the depression everyone was obliged to take a ten percent pay cut. In addition, because prices had dropped on gas, oil, and tires, all car allowances would be cut from fifty dollars a month to thirty dollars.
I was then sales manager and John Clark called me into his office to give me the news.
“Close the door, Ray, I want to talk privately with you,” he said. Then he told me how much he appreciated my hard work, how well the company thought of my production, but I would have to take a salary and expense cut. It applied to everyone, across the board.
This was a real blow. It wasn’t the reduction in salary that bothered me, but the affront to my ego. How could they treat the best salesman they had in this arbitrary fashion? I knew how much money I was making for them, depression or not, and I felt cold fury rising in me. I looked at him for a long minute, and then I said, very quietly, “Well, I’m sorry, but I can’t accept that.”
“Ray, you have no alternative.”
Now, when I get excited or agitated, my voice goes up in register and in volume. I was really agitated now.
“The hell I don’t have an alternative,” I yelled. “I’m quittin’. I’m giving two weeks’ notice right now, and if you want me to leave today, I’ll leave today.”
Mr. Clark was shaken by my outburst, but he managed to keep his voice fairly steady. “Come on now, Ray. Calm down. You’re not going to leave and you know it. This is too big a part of your life. It is your life. You belong here with your company and your men.”
I tried to control my temper. “I know it’s my life…” I started; then my voice went up again, “But goddammit, I’m not going to hold still for this. When times were good I got little enough in the way of rewards.…” Now I was shouting again. “Unacceptable. This is unacceptable, that I be put on the same basis with some of the people who are cost problems to the corporation. Those people—you know who they are—they’re part of the overhead in this company. I’m part of the creative. I bring in the money, and I’m not gonna put myself in the same category with them!”
“Ray, listen a minute. I’m taking a cut myself.”
“Take it. That’s your prerogative. Take it, brother, but I won’t accept it. I will not!”
I knew he must have been squirming inside, imagining the sound of our voices carrying through the walls to the horrified secretaries and clerks in the outer office. But I didn’t give a damn, and the more he tried to soothe me and assure me that the policy was designed to provide the greatest good for the greatest number, to protect all our jobs while times were bad, the madder I got. The capper was when he said that after I thought it over I would understand that it was the only fair way to handle it.
“I can understand it, perfectly,” I said as I stood up to walk out of the office. “But I refuse to accept it. This company has already squeezed me out of pennies. Now, the minute things get a little tough, I’m supposed to sacrifice dollars. Well, I’m not doing it. You can have your damned job with its ten percent pay cut. I’m quittin’ and that’s that.”
When I left the office that day, I took my sample case with me. I said nothing to my wife about what had occurred. I knew how upset she would be if she learned I had quit my job. To her, what I had done would be indefensible. I’m hotheaded and proud, and I felt my action was justified. I was a little frightened about my future, but I concealed it and acted as though nothing had happened.
Each morning I left home at the usual time, carrying my sample case. I would ride the elevated train to a corner in the Loop where there was an automat I used as a headquarters for reading through want ads over a cup of coffee. Then I’d set out on the day’s round of job interviews.
I was looking for work that offered something more than money, something I could really get involved in. But there were no jobs of any kind, it seemed. There were a dozen or more men for every opportunity, if one can stretch that word to cover the most mundane tasks. I felt some of the starch begin to seep out of me after three or four days, but I was determined that I would never go back to Lily Tulip hat in hand. After about the fourth day of this, when I went home, my wife greeted me with a look that would have withered crabgrass.
“Where have you been?” she demanded.
“What do you mean, where have I been?”
“Mr. Clark called here. He wants to know where you are.”
“Where am I?”
“Ray, don’t be funny. Something’s fishy here. I told him you are going in every morning, but he said he hasn’t seen you for the last four days. Don’t you go into the office every morning? What are you doing? What’s going on?”
I hemmed and hawed about taking some “future orders,” but I wasn’t very convincing.
“Well, Mr. Clark said he wants to see you first thing in the morning,” she said. “You will be there, won’t you?”
I felt trapped. I hated being put on the defensive. I walked away, but she kept after me like the determined Scot she was, telling me to answer her. So I whirled around and let her have it.
“I can’t take those cheapskates down there any more,” I blurted. “I’m quittin’!”
Zingo! Her jaw dropped. Her eyes widened. Then she really lit into me. I was betraying her and our daughter. My pride was jeopardizing our existence. She stormed on about my foolishness, how desperate times were, how difficult it was for anyone to find a job (I knew that!). But I had taken my stand. I wasn’t going to back down, regardless. I couldn’t. Everything in me resisted it.
“Ethel, honey,” I said soothingly, “don’t worry. I’ll find something. We’ll get by. I’ll go back to playing the piano if I have to.”
That was the wrong thing to say. She had spent too many nights alone while I was off playing piano so
meplace. I was afraid she was going to go into hysterics, so I agreed to go in and see John Clark the next morning.
When I walked into his office, Clark looked at me with alarm and shouted, “Where have you been?”
“I’ve been out looking for another job. I told you, I am not going to stay here.”
“Oh, come on, Ray. Close the door. Sit down. You can’t leave here. This is where you belong. Admit it. You love your work and you know it.”
“Yes, I do know it. But I can’t put up with the kind of treatment I’m getting. I simply will not stand for it.”
“This is only a temporary thing, Ray, just until times get better. Can you afford to be so independent?”
“According to my wife, I can’t. But I am. I take the cut as an insult, and I’m not going to be insulted.”
He walked to the window and looked out, hands shoved into his pockets, and was silent for several minutes. Finally, he turned to me and said, “Okay. Give me a couple of days to see what I can work out. Do your job as though nothing had happened. I’ll let you know in two or three days.”
“That’s fine with me. Two or three days.”
Late in the afternoon of the third day, he called me in again.
“Close the door and sit down,” he said. “Now, Ray, this is absolutely confidential. Here’s what we’ll do. I’ve made arrangements for you to get a special expense account that will make up for the ten percent salary cut. It will include the payment balance on your car of $20 a month. Now … will you stay?”
“Thank you very much,” I said. “On that basis I’ll stay.”
I felt several inches taller when I left that office. I’d won! This was going to be a fine prize to lay at Ethel’s feet.
Of course, the implication of the whole affair was that I would have to work harder than ever and produce more sales for the company. I did it gladly. Clark never told me so, but I knew as time went on that he was well aware that he had made a good deal. We had other run-ins from time to time, usually because of my insistence on protecting my customers. Most of these people trusted me enough that when I went into their stores, they’d simply wave and smile and go on waiting on customers. I would go to their stockrooms and see what their supply of paper cups was like. If they needed more, I’d order them. For the big-volume customers, I made certain they didn’t lose by dealing with me instead of a competitor.
I’d tell them, “Look, I think you’d better stock up on paper cups. I believe there’s going to be a price increase. I have nothing official, of course, or I wouldn’t be able to tell you about it. But there’s something in the wind, and I think your prices are going to be going up.”
When Clark found out about that, he was madder than a hornet. But it didn’t cost Lily Tulip anything. They had warehouses full of cups made at the existing prices, and it certainly built goodwill among my customers.
I had about fifteen salesmen working for me then, and we had a fine spirit of enthusiasm percolating among us. After work we would get together and talk shop, batting around ideas about how to sell more paper cups. That was fun. I loved to see one of these young fellows catch hold and grow in his job. It was the most rewarding thing I’d ever experienced. I wasn’t much older than any of them, and some were older than me. But I felt like a father to them.
It got to the point in the office that I was generating too much business, too much paperwork, to be handled by the clerical pool, so Mr. Clark told me I should hire a secretary.
“I suppose you’re right,” I said. “But I want a male secretary.”
“You what?”
“I want a man. He might cost a little more at first, but if he’s any good at all, I’ll have him doing a lot of sales work in addition to administrative things. I have nothing against having a pretty girl around, but the job I have in mind would be much better handled by a man.”
That set off another series of arguments and closed-door sessions. But finally I won my point. A young fellow named Marshall Reed came in off the street one day looking for a job. He’d gone to business school in California and had come to Chicago hoping to get work at a newspaper. That didn’t pan out, so he wandered into our office, and he was sent to me because the people out front knew that I was getting ready to place a classified ad for a male secretary. I liked Reed because he was honest and leveled with me from the start.
“I can type 60 words a minute and take shorthand at 120 words a minute,” he told me solemnly, “but this is my first experience outside of school. I don’t know anything about your business.”
“Don’t worry about it,” I said. “I’ll explain what I’m doing as we go along. If you have any questions, just ask me.”
It wasn’t long before he was a real working member of my team. My decision to hire a male secretary paid off when I was hospitalized for a gall bladder operation and later for a goiter operation. Marshall worked between our office and my hospital room, and we kept things humming as briskly as when I was in the office every morning.
We were doing well despite the depression. I had bought a Buick automobile, which I got secondhand for about the same price I would have had to pay for a new Model-A Ford, and I shined it up until it looked like it had just rolled out of the factory. Ethel’s Scotch thrift and my Bohemian prudence meshed well, and our savings grew steadily. We were able to afford a live-in maid now, a girl we hired for $4 a week plus room and board. We treated her like part of the family.
I took care not to be ostentatious (I detest snobs), but my style kind of dazzled my staff at the office. They were eager to follow my examples. I stressed the importance of making a good appearance, wearing a nicely pressed suit, well-polished shoes, hair combed, and nails cleaned. “Look sharp and act sharp,” I told them. “The first thing you have to sell is yourself. When you do that, it will be easy to sell paper cups.” I also counseled them on handling money, encouraging them to spend wisely and save some for a rainy day.
One morning as I was sending the boys out for a day of selling, I got a call that I was to report to Mr. Clark’s office. When I walked in he looked at me darkly, ignoring my friendly greeting.
“Close the door, Ray, I have a very serious matter to discuss with you.”
When I was seated, he leaned back in his chair and glared at me over tented fingertips.
“I hear that you’ve been telling your salesmen how to make money on their expense accounts.”
“That’s right,” I said. “I have.”
“Get out!” he exploded. “Get out of here and stay out!”
I nodded and walked carefully to the door. I put my hand on the knob and turned slowly to face him. It was deathly still, and I think he was feeling shocked at his own abruptness.
Our eyes locked and I said, “May I say something?”
He nodded grimly.
“Here is exactly what I told my men: Each of you gets a certain amount per diem for your expenses on the road. You get so much for a room, so much for travel, and so much for food. Instead of staying in a room with a bath, take a walk down the hall. You’ll be just as clean, and you’ll save some money. When you take the train, get an upper berth, you’ll sleep just as well as in a lower and it will cost you less. Don’t eat breakfast in the fancy hotel restaurant, go to the YMCA cafeteria. Have prunes and oatmeal; it’s filling and it’s good for you; it keeps you being a regular guy.”
By this time, Mr. Clark was grinning in embarrassed relief. He couldn’t say anything. He just turned his palms up and waved me out. I walked away feeling tall again, although I had half a notion to quit over his unjust accusation.
My battles with the boss were beginning to get me down, and I might have told him to go to hell once and for all if I hadn’t been having so much fun selling. There were interesting developments popping up all over. An engineer from Sterling, Illinois, named Earl Prince had a coal and ice business he was phasing out, and he was building little castles in towns all around Illinois in partnership with a boyhood buddy of his nam
ed Walter Fredenhagen. They called them Prince Castle ice cream parlors, and they sold cones and bulk ice cream and a few sundaes, for which they bought paper cups from me. I kept my eye on them, I thought their operation had a lot of promise.
Over in Battle Creek, Michigan, I had a customer named Ralph Sullivan who had put a dairy bar up in front of his creamery, and he had invented a drink that was pulling in an astounding business. Ralph had come up with the idea of reducing the butterfat content in a milk shake by making it with frozen milk. The traditional method of making a shake was to put eight ounces of milk into a metal container, drop in two small scoops of ice cream, add flavoring, and put the concoction onto a spindle mixer. Ralph’s formula was to take regular milk, add a stabilizer, sugar, cornstarch, and a bit of vanilla flavoring and freeze it. The result was ice milk. He would put four ounces of milk in a metal container, drop in four scoops of this ice milk, and finish it off in the traditional way. The result was a much colder, much more viscous drink, and people loved it. The lines around his store in the summertime were nothing less than amazing. This ice-milk shake had a lot of advantages over regular milk shakes. Instead of being a thin, semicool drink, it was thick and very cold. Since it had substantially less butterfat, it would be digested more easily, or as we say in the food service business, it wore better: People didn’t go around belching and burping for half an hour after drinking one. I was selling Ralph Sullivan a lot of paper cups. This started in about 1932, and it kept growing and growing until I was selling him 100,000 sixteen-ounce cups at a time.
Walter Fredenhagen was running the Prince Castles in my area from his office in Naperville. I’d never met Earl Prince. But I started working on Walter, trying to talk him into looking at Ralph Sullivan’s operation.