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The McDonald’s Origin Story Starring Michael Keaton On Circuit Soon

Get ready for a film based on the real, and gritty, story of how McDonald’s evolved into the fast-food giant it is today.

Nicole Crampton

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The origin story of McDonald’s, titled The Founder, is set to hit cinemas this year. The film is based on the true story of how Ray Kroc, played by Michael Keaton, manoeuvred himself into a position to buy the 1950s fast-food operation from brothers Mac and Dick McDonald, played by Nick Offerman and John Carroll Lynch. Kroc (Keaton) turned the small family burger business into the multi-billion-dollar fast food empire you know today.

McDonald’s: The Origin Story

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During the Great Depression in New Hampshire, two young brothers headed west to work in the ‘movies’, but the closest they got was hustling around film sets. Eventually, when they were both in their 30s, they opened a tiny drive-through restaurant in San Bernardino, California. This original restaurant was nothing like the McDonald’s outlets in operation now.

After owning the drive-through restaurant for several years, the McDonald brothers noticed that 80% of their sales were coming from hamburgers. Taking this insight to heart, they closed their doors for three months and overhauled the entire business into a self-service restaurant where customers could place orders at windows. The McDonald’s we know today was born.

Related: Starbucks Coffee Is All About Culture… For A Reason

They went lean, fired their 20 servers, and downgraded to paper wrappings and cups so they didn’t need to hire a dishwasher. The McDonald brothers then simplified their menu to just nine items, which included hamburgers, cheeseburgers, three flavours of soft drinks in one 12-ounce (350ml) size, milk, coffee, potato chips and pie.

“Our whole concept was based on speed, lower prices and volume,” says Richard ‘Dick’ McDonald. Taking inspiration from Henry Ford’s assembly line production of vehicles, the brothers developed the ‘Speedee Service System’ and mechanised the kitchen of their roadside burger shack.

In the beginning, a 12-person crew specialised in specific tasks, and a large amount of the food was preassembled, which reduced preparation time. The hamburgers were standardised, and if customers wanted something custom, they would have to wait for it.

During this time, Ray Kroc, a Chicago-born businessman, was helping the brothers assess their business opportunities in South Carolina. In the late 1950’s the company expanded into nine locations, and quickly became a leading franchise. Ray Kroc turned the small business into a corporation and quickly bought up the controlling equity in the business.

Building An Empire

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McDonald’s Deagu, Korea

Over the next 50 years, McDonald’s expanded from a small operation with roughly ten restaurants into the international juggernaut that it is today. The corporation started by spreading throughout the United States, and once it had saturated this market, it expanded overseas.

McDonald’s restaurants now operate in 118 countries and territories around the world, serving 68 million customers every day through its 36 525 restaurants. It employs approximately 420 000 people.

The restaurant has diversified over the years, offering unique menus to specific locations as well as halaal options in various Islamic countries. This rapid expansion has earned the company praise from business analysts, and success as a globally competitive franchise.

Over the years, McDonald’s has pioneered multiple features of the fast food industry. This franchise can take ownership for introducing the special morning breakfast menu in the 1970’s as part of its innovative food offerings.

Related: McDonalds: Susan Rawoteea

The Real Burger King

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Prince Castle Milkshake Multi-Mixers

Ray Kroc rose from humble beginnings, which included working as a paper cup salesman and jazz musician. Now, he is one of Time magazine’s ‘Most Important People of the Century’ because of his role in building McDonald’s into, arguably, the most famous and successful quick service restaurant in the world.

Back in 1954, Kroc was a struggling Prince Castle Multi-Mixers salesman. He then came across the McDonald brothers’ small hamburger shop in San Bernardino. At the time, the establishment was simple, only serving the basics, which were hamburgers, French fries, soft drinks, and milkshakes.

The brothers revived Kroc’s sales figures by purchasing several mixing machines for their kitchen from him. Curious about why the brothers needed so many mixers, Kroc decided to investigate the purchase further. Once Kroc had discovered the secret behind their ‘Speedee Service System’, he suggested that the brothers expand their presence.

The brothers appointed him as McDonald’s national agent and he began to launch their franchise across the country.

Building A Franchise

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In just six years, Kroc bought out the founding brothers for USD2.7 million, and by 1965, there were more than 700 restaurants across the United States. In order to maintain uniformity of quality and service, Kroc developed an innovative franchising model; he would grant a franchisee the right to only one store location at a time.

To ensure the success of his franchise, Kroc established strict standardised operations for all of the McDonald’s outlets, including such things as uniform portion sizes, simplified food preparation, affordable packaging and common ingredients. He also introduced heightened customer service standards, but left the marketing up to each franchise.

Although the initial creation of this concept didn’t come from Kroc, he had the vision to turn a niche restaurant into an empire.

He also insisted on keeping costs down in order to cater to the low-income market, ensuring that everyone could afford a McDonald’s meal.

Related: 5 Unique Ways To Build Your Brand Like The Big Companies Do

Establishing A User-Friendly Franchise

Kroc knew that each franchise would essentially rely on the image created by the brand, which led him to standardise both cooking and serving procedures.

This process was kept efficient and easy to learn, so that new and unskilled employees could be relied upon to represent the McDonald’s brand statement of quality.

When welcoming a new franchisee to the group, Kroc established a new arrangement, which allowed him to increase his earnings. He would charge a 1.9% commission on a franchisee’s sales, rather than charging a large start-up fee.

If you’d like to learn more about how McDonald’s went from one location in the USA to thousands of sites worldwide, this biopic of the evolution of McDonald’s will delve into the origins of how the fast food empire began, who ultimately started it and who had the vision to turn it into what it is today.

Related: 11 McDonald’s Facts That Will Knock Your Red And Yellow Socks Off

The Founder starring Michael Keaton will open in South Africa in the fourth quarter of 2016. Watch the trailer below – this movie is not to be missed.

Nicole Crampton is an online writer for Entrepreneur Magazine. She has studied a BA Journalism at Monash South Africa. Nicole has also completed several courses in writing and online marketing.

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Franchise News

Make Your Business The Talk Of The Town

Gone are the days that a Brand can think a national ad campaign will reap the awards without considering the impact on the local area in which it operates. Localised, customised messaging paves the way for communication that is genuine and relevant to customers. Localisation shows that a brand cares about its customers and genuinely pays attention to their unique needs.This is the way forward in digital advertising.

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As the reach and versatility of social and digital media have expanded, they have achieved more than simply adding another useful channel to the marketing toolkit, says Richard Mukheibir, CEO of Cash Converters.

“These new channels allow us to drill down into market sectors and localities, interpreting our brand message to appeal at local level encouraging existing and potential customers to step into the store and explore our offerings,” he says. “For franchises particularly, these channels have transformed the way we conduct our marketing activities and liberated franchisees to talk more directly to their customer base.”

For some time, retail chains have tailored stock levels and ranges to each store’s local market and demographic, he notes. Franchises, on the other hand, tend to operate over a spectrum of centralisation. Some insist on tight control of menus or skincare treatments offered and the products used to deliver these, while others give franchisees more room to manoeuvre to suit their market.

One of the foundations of Cash Converters’ business is buying and selling second-hand goods, putting it into the second hand category as availability of and demand for these products varies markedly according to an area’s demographic. This variety might seem like a marketing nightmare for any brand wanting to create a national footprint but, in fact, it offers a two-fold opportunity to maximise brand impact, says Mukheibir.

“Our advertising agency does fewer national campaigns for us, instead developing a creative approach that defines the ‘mother brand’,” he says. “This can be carried through to local area marketing by our franchisees.”

Related: Cash Converters Franchise Listing

Templates for more traditional media channels from radio slots to lamp-post posters can then be applied by each franchisee to their store-specific brief, assisted and authorised by the company’s marketing team before broadcasting or publication. The team can also help familiarise franchisees with associated processes from booking advertising space to awareness of local bylaws regarding posting advertising material.

Like many other SA brands, Cash Converters includes newer advertising channels such as SMS, WhatsApp, Google and Facebook in its marketing mix. The company drives this centrally to ensure that content is in line with brand standards. The company’s local-area marketing manager Juan Botha gives franchisees seminars and step-by-step guidance on how to use these channels successfully, right down to a manual on photographing stock to appear at its best on social media. Cash Converters is seeing particular success through its use of Lead Gener8or™, a unique tool developed by South African digital agency Bastion & Flowe.

“What appeals to us is how this tool allows us to empower our franchisees to run their own cost-effective, bespoke local marketing campaigns in a radius around their store,” says Mukheibir. “Franchisees have access to a team of Bastion & Flowe’s digital marketing experts, while our central marketing department stays in control of the overall message, branding and how the ads look. Protecting the brand with consistent messaging that supports our company values is important for all our franchisees, plus the capacity to extend their marketing locally offers each of them the opportunity to improve their individual results.”

Lead Gener8or™ allows franchisees to target its advertising using insights from Google, Facebook, Cash Converters’ customer book and Bastion & Flowe’s extensive consumer database, explains JG Bezuidenhout of Bastion & Flowe. This ensures the communication reaches a carefully curated list of potential customers through optimised placement on Google, Facebook, Instagram or YouTube.

“A couple of centuries ago, town criers used to keep the public up to date on what was happening in their community,” says Mukheibir. “Social media is our equivalent of this today and we recognise that we still need to hone our messages carefully if they are to be heard above the digital clamour and, with Lead Gener8or™, succeed in making our businesses the talk of the town.”

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Franchise News

Servant Leadership Key For Healthy And Growing Businesses

The success of beauty brand – Sorbet – hinges on its people and their passion, argues its founder and CEO Ian Fuhr. Speaking at a UCT Graduate School of Business event in July, Fuhr said that if you focus on your people and create a working environment where they feel nurtured, cared for, content and inspired, they will be motivated to serve their guests to the best of their ability.

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Servant leadership in business is important particularly in the South African context, says Ian Fuhr, founder & CEO of Sorbet – a leading South African beauty brand.

“It [servant leadership] becomes more important in the South African context because the country is highly diverse …it’s about race, it’s about religion, culture, and language,” Fuhr said during a roundtable discussion on his new book at the UCT Graduate School of Business (GSB) in July.

According to Professor Kurt April, chair of the Allan Gray Centre for Values-based Leadership at the GSB, servant leadership is a philosophy and set of practices that enriches the lives of individuals, builds better organisations and ultimately creates a more just and caring world. A servant-leader focuses primarily on the growth and well-being of people and the inclusive communities to which they belong. He adds that it starts with self-mastery. “If you cannot lead yourself, you will struggle to lead -diverse-others and head up organisations. It starts with the self, with true self-awareness that guides behaviour, choices and decision-making”.

According to Fuhr, building a successful organisation requires leaders to “accept and respect people who are different to us and to learn to live with each other”.

Related: Sorbet’s Ian Fuhr: Servant Leadership Personified

“There is no reason why we cannot build a rainbow community within our workplace. We have to understand each other, accept and respect people who are different to us, and learn to live with each other…and this is one thing we work on [at Sorbet] to get people to understand the importance of accepting and respecting people who are different to you. You might not agree with them but you need to respect that they have different views to yours and that you are not always right,” he said.

Servant leadership requires a paradigm shift and that you have to lead by example, Fuhr continued. In this spirit, he says the he personally does the induction training at Sorbet. “It helps that I am able to explain directly what’s important and why they [workers] have to believe what we believe in.”

The GSB regularly hosts business leaders to discuss and share ideas to improve business and society on its Distinguished Speakers Programme. Facilitating this event was GSB alumna, Heloise Janse van Rensburg  (MBA 2017), whose MBA dissertation was on “How the ‘Sorbet Way’ of Servant Leadership is Scooping Up Success”.

Fuhr established Sorbet in 2005 and it has become one of the largest beauty franchise businesses in South Africa, with just over 200 salons, including five stores in London.

Advising up-and-coming entrepreneurs, Fuhr said business owners need to have intuition “which tells you something is right”. “You have to have courage because there will be times when you want to throw in the towel… and determination because it’s a long journey. No business ever happened overnight. You should not be afraid to fail.”

In his book, The Soul of Sorbet: Building People, Culture and Community, co-written by Johanna Stamps Egbe, People and Culture Manager of the Sorbet Group, Fuhr emphasises the need to focus on employees and customers in order to grow a business.

“It’s like the age-old question: ‘What came first? The chicken or the egg?’ Similarly, in business we have to ask: ‘What comes first? The purpose or the reward?’ I believe that the purpose is paramount and the reward is the natural result.

“If you focus on your people and create a working environment where they feel nurtured, cared for, content and inspired, they will be motivated to serve their guests to the best of their ability with a positive attitude, and to touch the lives of those guests in a powerful way. This creates loyal guests who will feel good about themselves and enjoy visiting your business on a regular basis, and spending money on products and/or services.”

Related: Servant Leadership – Will You Serve?

Fuhr added that “lean and mean” businesses might well produce short-term profits for the shareholders, but sooner or later the culture will impact negatively on productivity.

“There will be nothing to inspire exceptional performance and the culture of fear will begin to debilitate the business. Negativity will spread like a cancer. Demotivation will set in and customer service will no longer take centre stage. Despite the fact that they might be earning a good salary, when people are discontented and disillusioned in their working environment and unhappy about the way they are being treated, their anger and frustration become directed towards their managers. The internal conversations become nothing more than moaning and bitching sessions and the biggest casualty, by far, is always the customer who is now just an interference in the ongoing battle between management and staff.

“A short-term profit obsession can sometimes lead to fundamental blunders, particularly when restructuring is overdone and the staff complement becomes so thin that the business can no longer effectively serve its customers.”

It is next to impossible to grow a business without focussing on the people that make the organisation,” he concluded. As Stamps Egbe has said:

“How will you grow your business if you do not grow your people…that is an important philosophy.”

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FASA Establishes Industry Specific Food Franchise Forum

The Forum is bound by a supplementary code of ethics for the franchised food sector and will adopt a series of monitoring measures by its measures.

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The Franchise Association of South Africa (FASA) is delighted to announce the establishment of a Food Franchise Forum representing the majority of the household names in the casual dining and quick service restaurants (CDQSR) sector.

Based on 2016 figures, the franchise sector as a whole generated R587 billion in sales; this amounts to a significant 13.3% of South Africa’s GDP. Of this, the CDQSR segments contributed 29% of the total. The sector also employs some 65,500 people, the vast majority of whom were previously untrained individuals who otherwise stood little chance of finding employment in the formal economy.

More than six decades have passed since the CDQSR sector spearheaded the development of modern-day franchising. Franchising has subsequently made strong inroads into a dozen or so other industries, yet recently published research confirms that the CDQSR sector continues to play a dominant role in franchising as the chart below illustrates.

Whilst the Franchise Association of South Africa (FASA) operates under a government gazetted Code of Ethics for its 17 different sectors, the development of a Food Franchise Forum within FASA to liaise specifically on matters that have the potential to impact on the sector is an important step in the challenging food environment. The Forum is bound by a supplementary code of ethics for the franchised food sector and will adopt a series of monitoring measures by its measures.

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Related: 6 Things You Need To Know About Profit And Cashflow

More than six decades have passed since the CDQSR sector spearheaded the development of modern-day franchising. Franchising has subsequently made strong inroads into a dozen or so other industries, yet recently published research confirms that the CDQSR sector continues to play a dominant role in franchising as the chart below illustrates.

Whilst the Franchise Association of South Africa (FASA) operates under a government gazetted Code of Ethics for its 17 different sectors, the development of a Food Franchise Forum within FASA to liaise specifically on matters that have the potential to impact on the sector is an important step in the challenging food environment. The Forum is bound by a supplementary code of ethics for the franchised food sector and will adopt a series of monitoring measures by its measures.

Indications are that the food sector will continue on its growth trajectory. This is of particular importance in the South African context because it creates real, value-creating opportunities for the establishment of sustainable small enterprises under franchise arrangements and further job creation. Moreover, the sector makes an important contribution to South Africa’s vibrant tourism industry.

According to Vera Valasis, Executive Director of FASA, “It is common knowledge that our sectors find themselves under increasing pressure emanating from an ever-growing number of legislative and regulatory interventions. This is not a specifically South African phenomenon. Similar roadblocks are popping up in other parts of the world, with well-documented developments in the US and the EU being cases in point. Some of the regulations these countries have enforced, or are considering, are onerous and threaten the very survival of many long-established food service operations.”

Chairperson of the Food Forum, Nazrana Hawa of Spur, which spearheaded the establishment of the forum under the auspices of the Franchise Association of South Africa comments, “Raising awareness about issues affecting our sector requires a united voice and a credible representative body mandated to speak on behalf of the sector.”

Examples of recent issues causing concern to operators in South Africa’s CDQSR sector range from the recent food safety scare, draft liquor policy and proposed smoking regulations. Other key projects identified for consideration are new regulations for food licences, labelling regulations, proposed requirements around gas installations, tax laws that may affect the sector and developments around landlords and rentals and the POPI Act.

According to Hawa, “Experience tells us that representations submitted to government by individual brands, no matter how well-reasoned, are unlikely to achieve the desired results. For the sector to be heard it needs to do so through a credible, representative body, mandated to speak on the CDQSR sector’s behalf.”

Related: Thinking Of Going Into Franchising?

Hawa continues, “As FASA is a well-established, representative body of long-standing, with strong local and international linkages and enjoying good relations with relevant government departments, members felt that setting up the proposed body under its umbrella makes perfect sense.  For the initiative to achieve its objectives, however, will require buy-in by most, if not all, of the credible franchised brands and from suppliers to the industry.”

Hawa notes, “Given that government has gazetted FASA’s Code of Ethics and has expressed the intention to adopt the code for broader use, further cements FASA’s standing as franchising’s sole representative vis-a-vis government and other stakeholders. The need for and value of the Forum is validated by the fact that major franchise companies have come on board including: Famous Brands, KFC, Nando’s, Taste Holdings, Fournews, Hot Dog Cafe, Barcelos, Pizza Perfect, Adega, Mike’s Kitchen, King Pie, Jimmy’s Killer Brands, Chicken Xpress, Kauai and OBC Chicken & Meat.

Hawa clarifies, “While FASA will continue to represent the interests of franchisors across a variety of business sectors, including the restaurant sector, the FASA Food Franchise Forum will represent the sector-specific and clearly-defined interests of the CDQSR sector only.”

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