Grinding It Out

by Ray Kroc

  It was wonderful to see how the San Diego fans got behind the Padres and supported them even when they were losing, which was most of the time during our first two seasons. Attendance at the park has increased dramatically each year. It will get even better as the team continues to improve. We have had a lot of fun encouraging this spirit with promotions like tailgate parties, which had become traditional for football games and adapted readily to baseball. One time I gave away ten thousand dollars in a big money-grab before the game. We picked forty spectators out of the stadium at random and let them onto the field, which was strewn with paper money. They could keep all they could pick up in a certain time limit, and I’ll tell you, there was some mighty scrambling out there.

  Buzzy clearly appreciated my active interest in the team. He told me that all too many owners are absentee landlords, he says. We stay in touch by telephone all the time. When he first took me on a tour to meet the office staff, I was appalled at the wages we were paying. I understood that had been necessary because of Smith’s financial troubles, but I didn’t want the front office folks to think I was a miser. I’m not talking about players; they’re pros and have good contracts. I told Buzzy, “I want you to give all these people raises, across the board.” He really boggled at that. He told me that baseball people traditionally scrimp by on very low pay. They have to, because they have more bad years than good years. I replied that, tradition be damned, any team I own is going to pay decent wages. Well, we compromised on it. We didn’t make an across-the-board increase. But I made sure that the people who deserved a raise got one. They all got bonuses at Christmas and when the team was doing well. Buzzy had to admit later that part of the team’s increasing success was due to the new interest and efficiency in our front office.

  Our ball park is owned by the City of San Diego, so I can’t do as I please there. Some of my plans for landscaping and other improvements to beautify the park got scuttled by the city fathers. No hard feelings. They have their football crowds to consider, and my plans would have eliminated some seating. But I keep coming up with ideas to make our games a more pleasant experience. One of them was the electric one-man band, a player piano rigged up with drums and cymbals and all kinds of other effects. I had it painted Padres yellow and brown and installed it near the entrance to the stadium. Buzzy thought it was really a nutty idea. But he changed his tune when he saw how the crowds gather around to watch it play before games. I also came up with the idea for selling a big bucket of popcorn for a dollar. We promoted it as the world’s biggest box of popcorn. I have some other ideas along this line, too, such as the new kind of cookie we’re calling the Farkelberry Snickerdoodle—I got the idea from Jim Delligatti in Pittsburgh, where Snickerdoodles have been described as “albino brownies with measles.” I am just getting started with these promotions.

  The team itself is improving all the time. Before the start of the 1977 season we added some fine players in Gene Tenace, a catcher, fielder, and power hitter, and Rollie Fingers, an outstanding relief pitcher, both of whom were formerly with the Oakland A’s. Another relief pitcher, Butch Metzger, was named Rookie of the Year for the 1976 season. We were expecting another super season from pitcher Randy Jones, a regular starter who won the Cy Young Award in 1976.

  Unfortunately, Buzzy Bavasi resigned after the 1977 season. I became president of the club, but not to run it—I am leaving that up to my son-in-law, Ballard Smith, who is executive vice-president. Bob Fontaine, vice president and general manager, is in charge of everything that has to do with playing baseball, and Elten Schiller is business manager. This will be a completely different style of management for the Padres. Buzzy ran a one-chair barbershop and nobody could make a move or spend a nickel without consulting him. I don’t believe in that. I delegate authority. Bob Fontaine is free to make any trade he wants without my approval. Of course, he can’t make any million-dollar deals without my consent. But he and Ballard and Elten are mature, stable, and competent men, and I intend to let them do their jobs without interference.

  On the whole, owning the Padres has been very rewarding. One of the best things about it was discovering the progressive spirit of San Diego. I think it’s destined to become one of the fastest-growing communities in the country. It’s wonderful. Weather conditions are perfect for all kinds of manufacturing, labor is plentiful, and there’s an energetic mood about the place that Phoenix and Miami and Fort Lauderdale once had but have lost. That’s why I bought the San Diego Mariners of the World Hockey League in August 1976. I felt the city deserved to have professional hockey as well as baseball and football. But that didn’t work out very well. The fans didn’t seem to be ready to support hockey, and I wound up selling the team back to the league. I never paid much attention to the game personally anyhow.

  Doing things like buying baseball teams and hockey teams always opens a person to criticism from folks who think they have better ideas about how one’s money should be spent. There is a common fallacy that money will solve problems. It won’t. Money creates problems, and the more you have, the bigger the problems, not the least of which is how to spend it wisely.

  People have sometimes accused me of being a hungry tiger for money. That’s not true. I’ve never done anything for the sake of money alone. Several years ago, when we were first beginning to generate big income, I made a speech at a financial meeting, and a fellow got up and said, “Isn’t it interesting that Mr. Kroc has so much enthusiasm and spirit. You know that he owns four million McDonald’s shares and the stock went up five dollars.” I was floored. Actually embarrassed. The fellow was looking at me. So I said into the mike, “So what! I can still only wear one pair of shoes at a time.” I got a hell of a hand. But, you see, that’s the mentality. The person who thinks only in terms of “Where’s mine?” can’t imagine anyone else not thinking the same way. We’ve actually had writers criticize McDonald’s policy of furnishing free coffee and hamburgers when natural disasters strike as being a self-serving public relations gimmick. That’s kind of hard to take, because we’re always trying to be good neighbors and responsible citizens. We’ve always encouraged our franchisees to become involved in community activities and to make donations to worthwhile charities.

  Other unfair things have been published about us. For example, we were accused of having torn down a Greek Revival “landmark” building in Cambridge, Massachusetts, so we could build a McDonald’s on the site. The writers failed to mention that the building was a wreck. It had been vandalized and burned before we bought it. The city of Cambridge had refused to designate it as a landmark building. That store had a rough time after it opened in 1974 because of all the politically motivated demonstrations against it. The operator, Lawrence Kimmelman, was only able to hang on because he had a couple of other stores in the Boston area. Gradually, however, the residents of Cambridge began to realize that the store was an asset to them. They forgot about all the negative rhetoric. Business picked up. A black woman who was a Democratic ward coordinator and had been one of the most vocal opponents of our opening was so impressed later that she went to work for Kimmelman in that store. Then in 1976 Congressman and Speaker of the House Thomas P. “Tip” O’Neill told Kimmelman he was glad that McDonald’s had overcome their problems in Cambridge because, “You are doing a terrific job of community service here.”

  We were accused of “shocking manipulation” in our dispute with labor unions in San Francisco. I suppose that’s another way of saying we don’t fool around. It’s always shocking to be a loser. I was quoted as asking Mayor Alioto, “What would it take to put a third McDonald’s in San Francisco?” I never spoke those words or any like them.

  None of this is meant to sound as though I think I’ve never made a mistake. Far from it. I could probably write another book about my mistakes. But it wouldn’t be very interesting. I’ve never seen negatives add up to a plus.

  One time Harry Sonneborn, June Martino, and I invested in a beer garden restaurant on the south side of Chic
ago. That was a loser. I tried my hand with an idea for an elegant hamburger restaurant called Ramond’s. The corporation opened two of them, one in Beverly Hills, the other in Chicago. They didn’t take hold, so I cut our losses and got out. One good thing came of Ramond’s: it gave us the prototype for the in-city McDonald’s restaurants that are now proving so popular. Part of the problem with Ramond’s was my insistence on quality in a restricted-volume kind of operation, which kept the profit margin thin as the skin on a hot dog. The same was true of a venture we started back in my California days, the Jane Dobbins Pie Tree chain. Hell of an idea. Great pies, too. In fact, they were so good we were going broke selling them. I’ve also come up with some pretty big flops for McDonald’s. I’ve already done the blow-by-blow on the ill-fated Hulaburger and told how it was devoured by the voracious Filet-O-Fish. Lou Groen still ribs me about that if he gets a chance. Roast beef was another bust. We were pretty excited about it at first. But roast beef is difficult for our kind of operation to deal with. It went well in a few stores, but it simply did not adapt to our system. We learned a lot about testing requirements in that roast beef fiasco, though. That’s important, because if you are willing to take big risks, and I always have been, you are bound to blow one once in a while; so when you strike out, you should try to learn as much as you can from it. I think we probably found out enough about our own methods from the roast beef experiment to more than make up what we lost on it.

  There’s one other mistake I made that I mention only because so many jackasses have brayed about it. That was my $250,000 donation to President Nixon’s campaign in 1972. I let myself be talked into that by Nixon’s fund-raiser, Maurice Stans, and it wasn’t until later that I realized I had made the contribution for the wrong reason. My motive was not so much pro-Nixon as it was anti–George McGovern. I should have known at the time that this went against my rule of not trying to make a positive out of a negative action. The worst thing about the donation was the subsequent implication by some sons of bitches that I made it in order to get favorable treatment from the federal price commission in regard to the price of our Quarter Pounder. As my friend and lawyer, Fred Lane, says, “This has been thoroughly investigated by the Watergate Select Committee, the Government Accounting Office, the Department of Justice, and the House Committee on Impeachment, and none found any hint of impropriety.” I use his language because my own is unprintable.

  A student at one of my talks at Dartmouth asked if I demanded that my executives in McDonald’s follow my politics.

  “I can answer that,” Fred Turner interjected. “Kroc voted for Nixon and I voted for McGovern.”

  “That’s right,” I added, “and we were both wrong.”

  After the laughter died down, I added, “I believe that if two executives think the same, one of them is superfluous.”

  I get mad as hell and cuss when someone takes cheap shots at McDonald’s or me in print. Yet I always admired Harry Truman and liked what he said about getting out of the kitchen if you can’t stand the heat. I’m not about to get out of the kitchen. I’ve got a lot more plans I want to carry out for McDonald’s before I hang up my spatula.

  16

  One evening not long after I had bought the San Diego Padres I was shooting the bull with Dave Condon, sports columnist for the Chicago Tribune. We got onto the subject of that great Cubs team of 1929, when they made it to the World Series against Philadelphia. “You know, Dave,” I told him, “I am the perfect example of reincarnation. I died the day Hack Wilson lost that fly ball in the sun!”

  Kidding aside, I do sometimes feel as if I’ve been given an extra shot at life. I owe this to medical science, and that’s why I set up the Kroc Foundation.

  I had resisted the foundation proposal at first because it was presented as a tax shelter. I’m not interested in that sort of thing. I don’t make charitable donations because they will give me tax deductions. That’s a peculiarity of mine that runs against common business practice. It’s the same thing with expense accounts. I’ve never submitted a personal expense account to McDonald’s in my life. In the early days, of course, it would have been an empty exercise. I didn’t take a salary; I was keeping the thing afloat with my income from Prince Castle Sales. But even in later years it never entered my mind that I should be reimbursed by the company. I pay most of my company expenses out of my own pocket, although, of course, I do use my company credit card. By the same token, I have purchased a fleet of nineteen customized Greyhound buses, outfitted with kitchens, rest rooms, telephones, color television, and lounge-style seating and I rent these to the corporation for one dollar a year. Each of our districts books the use of one of these Big Mac buses to its operators for worthwhile activities such as taking disadvantaged children and senior citizens on outings. I also bought the company plane, a Grumman Gulfstream G-2 jet. McDonald’s rents it from me for the same low price, one dollar a year. The G-2 can fly anywhere in the world, and we make good, cost-cutting use of it for executive travel. My point here is that I believe in spending my money in useful ways. It wasn’t until Don Lubin proposed the foundation as a means to benefit medical research that I pricked up my ears and started paying attention.

  As we discussed the idea, I realized that my brother would be exactly the right man to make president of the foundation. Robert L. Kroc is a Ph.D., and in 1965 he was head of the physiology department in the research institute of Warner-Lambert, the pharmaceutical firm. His specialty was endocrinology, and he was widely respected in the field. It was not easy to persuade Bob to give up his post and his home in Morristown, New Jersey, and move his household to my ranch in Southern California. But he finally did it in 1969, and he has done a fine job of establishing the foundation. The headquarters building at the ranch has complete facilities for scientific conferences and presentation of research papers.

  My brother Bob talks the language of science. He’s pedantic and painstaking; he’s willing to get fewer things done in order to make fewer mistakes. I’m impatient. I’m willing to make a few mistakes in order to get things done. So our thinking is miles apart on the handling of money for the foundation. I never realized it could be so damned difficult to give away money. Our grants seem to take endless study and deliberation. Yet I must say that Bob has managed to fund some important research. We have had many highly esteemed scientists and physicians attend our conferences, and the results of their sessions have been published as books and as supplements to the most prestigious medical journals.

  The Kroc Foundation supports research into diabetes, arthritis, and multiple sclerosis. All three of these diseases strike young adults and rob them of vitality in their best years. I selected them for that reason, and also because each has touched my own life destructively. I have diabetes myself. My first wife, who is now dead, suffered from it, too, and my daughter, Marilyn, died from it in 1973. Arthritis had rusted out my hip joints to the point where I couldn’t get around without a cane. In 1974 it confined me to bed, and I said that was it! My doctors had resisted performing surgery on me because of my diabetes and high blood pressure, but now I insisted on having one of those plastic hip joints even if it killed me. I’d rather be dead than forced to stay in bed. Well, it worked out fine. I threw my cane in the closet, and now my wife has to keep reminding me to slow down. Multiple sclerosis has handicapped my sister, Lorraine. She and her husband, Hank Groh, had three McDonald’s in Lafayette, Indiana. My brother says Lorraine might have been a female Ray Kroc because she takes after me in many ways.

  The foundation expanded its activities in 1976 to include a public awareness program relating to the effects of alcohol misuse on the family. The program is conducted under the name Operation CORK (Kroc spelled backward), and it is one of Joni’s main concerns. She has devoted a lot of time and organizational effort to it, working with the Rev. John Keller and Fred Lane.

  I have always enjoyed helping other people. It’s the reason for my interest in the work of the foundation. It’s also why, ear
ly in 1972, I decided I would celebrate my seventieth birthday that October by giving a significant amount of money to some worthy cause. A million dollars was the figure mentioned when I first discussed the idea with Joni and Don Lubin. It seemed like a nice, round number. But as the weeks and months went by and we drew up lists of possible recipients, the amount of money kept growing.

  I planned to benefit Chicago institutions because Chicago is home for me and for McDonald’s, and I wanted to show my gratitude. Another consideration was the fact that young people and families have been important to the success of McDonald’s, and I wanted my gifts to acknowledge that. So my final list had major gifts to Children’s Memorial Hospital, for genetic research and construction of new facilities; the Passavant Pavilion of Northwestern Memorial Hospital, for a research institute to study birth problems; Adler Planetarium, for the development of a Universe Theater; Lincoln Park Zoo, for construction of a Great Ape House; PACE Institute, for educational and rehabilitation programs for inmates of Cook County Jail; Ravinia Festival Association, to start an endowment fund; and Field Museum of Natural History, for a major exhibit on ecology.

  It happened at the time these gifts were being considered that a blood donation day was organized at the McDonald’s office in Oak Brook to help the young son of Red Llewellyn of our accounting department. The boy, one of ten children, was being treated for leukemia at St. Jude’s Children’s Research Hospital in Memphis, Tennessee, and he needed many blood transfusions. Red’s wife came in later to thank me. She told me about what marvelous care her son had received at St. Jude’s. So I did some investigating and learned more about the place. Then I added it to my birthday list.