Can We Learn From “The Founder?”
The recent movie “The Founder” is based on the story of how Ray Kroc grew the McDonald’s brand through franchising. Several scenes in the movie peaked my interest as being eminently relatable to 7-Eleven and even prompted me to look for more McDonald’s comparisons to our system.
The first scene revolves around the design of the prototype McDonald’s opened in San Bernardino, California in 1948. The McDonald brothers closed down a very successful restaurant to streamline their business and franchise. They limited their menu items to a select few items that were responsible for a majority of their profits, including hamburgers, cheeseburgers, soft drinks, coffee and apple pie. They eliminated carhop service and made the restaurant self-serve. During the shutdown, they also redesigned the kitchen to optimize efficiencies. They accomplished this by drawing a life size diagram of the kitchen on a tennis court using chalk. They had employees act out their specific roles in the kitchen on these chalk outlines and redrew the lines as needed to create a food prep area as efficient as possible
In another scene Ray Kroc overruled the McDonald brothers’ decision not to use a powdered mix for milkshakes. A franchisee had brought the idea of a milkshake mix to Ray Kroc explaining that they were struggling to be profitable. Milkshakes had traditionally been made with ice cream, but this came with a high cost, not only for the ice cream but also for the refrigeration and utilities required. Ray Kroc understood the value of helping franchisees maximize their bottom line while at the same time ensuring that the product was not of compromised quality.
At one point in the movie the McDonald brothers talk about designing a restaurant that would achieve the goals of further increased efficiency and a more attention grabbing visual appearance. With the help of architect Stanley Clark Meston, the first prototype McDonald’s complete with the golden arches and red, white and yellow color scheme was opened in Phoenix, Arizona in 1953. In 1969 McDonald’s introduced the “mansard roof,” which became the standard design for all McDonald’s restaurants and franchisees were required to rebuild older restaurants to this new standard.
In 1998 a system change called “made for you” was implemented to differentiate McDonald’s from their competition by allowing customers to special order sandwiches and franchisees easier implementation of new menu items. This change was an expensive endeavor for the franchisees at $25,000 per unit, but McDonald’s offered to pay for half of the cost and offered financial assistance.
In 2003 as sales struggled, McDonald’s decided again to reimage their restaurants. By 2006 they adopted the current look with the swish eyebrow called “Forever Young.” This redesign and renovations were estimated to cost approximately $400,000 per restaurant. In the McDonald’s system franchisees are responsible for the cost of these upgrades.
In May of this year, in response to lagging sales, McDonald’s announced it is willing to pay 55 percent of the costs associated with the newest planned upgrade. McDonald’s stated in a letter to their franchisees “a key component” of its growth plan is “transforming how our customers experience our brand by modernizing the interior and exterior of our restaurants and leveraging hospitality and technology to enhance our customers’ experience.” They need 67 percent of franchisees to commit to the upgrade before they will help fund the upgrades.
It’s easy for a 7-Eleven franchisee to see how these points relate to our current situation. Not everything in the McDonald’s history was successful. There are plenty of examples of failure and missteps, including investment into other brands and failed product introductions. As the world’s most recognized brand McDonald’s was able to overcome these mistakes by doing what it has always done best. Can 7-Eleven learn from these examples?
If food is the future of the 7-Eleven brand then we must, like the McDonald’s brothers, reinvent our stores and product offerings to make our food prep areas more ergonomic and prepared items more focused and profitable. 7-Eleven needs to adjust the gross profit split in favor of franchisees for the additional labor demand our food service offerings require. 7-Eleven needs to source goods at the lowest possible cost including considerations for labor. 7-Eleven must break down silos and constantly challenge the status quo in order to improve our system and profitability. McDonald’s remodeled and reimaged all of their stores first after 16 years and then again 37 years later. In the current business environment with increased competition from c-stores and from other channels 7-Eleven must remodel and reimage both the interior and exterior of all stores and bring each store to a minimum standard. We also need a memorable marketing campaign that reminds our customers why they love and trust our brand.
One thing I know for sure is that brand 7-Eleven is infectious. Franchisees in the 7-Eleven system live the brand everyday. We see how our customers respond. No one has more invested in the brand than we do in time, sweat equity and money. If we can refresh our brand and continue to evolve, there’s no limit to what we can accomplish together.