How McDonald's Was Stolen

Added: 2026-06-04

[00:00:00]So McDonald's is a place that most of us grew up going to, but depending on how old you are, your McDonald's experience might be completely different from mine.

[00:00:08]Some people had that old school version, you know, people eating in suits, grabbing lunch, the employees with the funny hats. Kind of like that classic American feel.

[00:00:17]>> When you're really hungry, stop at McDonald's and ask for the big meal.

[00:00:21]>> And when you fast forward to today, it feels like every location got that same corporate sterilization treatment. But for me, I had Gamecubes in the lobbies, random birds in the playscape scaring the hell out of us kids, and even creepy ass life-sized PVC Ronald McDonald sitting outside on the bench to welcome everyone. Well, guys, I'm here at the very first McDonald's that I would ever go to with my grandfather.

[00:00:44]Basically, every summer when it was hot just like this, me and my sister would come out here and uh actually beg my grandfather to let us roll down this little hill right here. And now that I'm an adult, I've actually realized that it is a very nasty ditch. There's litter, there's mosquitoes. It's disgusting. So, he would pull up in his old blue Toyota Corolla. I remember he always had the bug spray on deck because every single time we rolled up and down this thing a couple of times, we would get so many bug bites, get bit by all types of [ __ ] and other than that, we were really just coming here super early in the morning so he could get his free coffee just to sit with a bunch of other old men and read their newspapers inside. Ah, the world used to feel like such a simple place. And I'm sure many of you have some sort of story from there over the years. And that is exactly what this man wanted. The founder of McDonald's himself. But wait, why is his name Ray Croc? And who the hell are these guys?

[00:01:41]Most of you know the golden arches, the broken ice cream machines, the diabetes inducing sweet tea, and the salty fries, but don't know the real story about how McDonald's became the most successful fast food restaurant in history. and how the entire empire may have been stolen.

[00:01:57]This is a story about the American dream come true, but it is also written with deception, lies, cheating, and getting what you want at all cost. But hey, what could be more American than that?

[00:02:11]From an early age, Ray Croc knew that he was born to sell. As a kid, he was already running a lemonade stand. He worked at the local soda fountains and played piano for tips at a bar. And at just 15 years old, he dropped out of high school and lied about his age to join the Red Cross as an ambulance driver during World War I.

[00:02:29]>> My parents didn't want him to uh to join up, but uh well, he wanted to do what other fellas were doing and he didn't like school.

[00:02:40]>> And though Ray would never see combat, it showed that he obviously had that fearless salesman energy from the start.

[00:02:46]And after the war concluded, he would get married and then spend the next three decades as a traveling salesman, pedalling everything from paper cups to ribbons and eventually the multimixer, a machine that could make five milkshakes at once. Croc would secure the exclusive rights to market the machine, and he would spend years on the road pitching it to soda fountains, diners, and drive-ins everywhere. And that is when Ray started noticing how messy and inefficient most restaurants were. I'm talking long wait times, dirty kitchens, and inconsistent food.

[00:03:16]>> Drive-ins then were teenage places kind of hangouts.

[00:03:19]>> Then in 1954, at 52 years old and feeling like his best days might be behind him, Ray would get a huge order, eight multimixers from one restaurant in San Bernardino, California. Like, who the hell was selling enough milkshakes to warrant eight machines? So, he got in his car and drove across the country to see for himself. And that's when Ray Croc met Dick and Maurice McDonald, aka the actual McDonald brothers.

[00:03:44]>> He went to work as a franchise agent.

[00:03:45]The first time we talked to him, we could tell that he was very, very aggressive. Very aggressive. And uh what you have to be to be a salesman.

[00:03:55]>> And what Ray saw really did blow his mind. As the brothers had created something that they called the speedy service system. After previously selling barbecue for years, they simplified their entire menu to their most popular items, burgers, fries, shakes, and drinks. And they would do this while simultaneously getting rid of their car hops, redesigning the entire kitchen into an assembly line, giving every employee one specific job, and using precise measurements for everything.

[00:04:23]Now, food that used to take 30 minutes came out in under 1 minute. And not only was it fast, but it was hot, fresh, and cheap. and most importantly consistent every single time. And they were also the first fast food restaurant to introduce the concept of getting out of your car, walking up to a window, ordering your meal, and getting the food for yourself.

[00:04:43]>> We had eliminated all nice glassear and dishes. Everything was on paper. And they weren't too happy about that. They just weren't happy about any part of it.

[00:04:53]People would come in, they'd honk their horns, wanted the car hop. At night, they blink their lights. They wanted the car hops. We had signs all over the place that people don't pay much attention to.

[00:05:03]>> So yes, this was such a popular place in San Bernardino that they were dishing out 40 milkshakes at once. Hence the order for the eight multimixers. This is why their original mascot was not a clown named Ronald McDonald's.

[00:05:16]>> What do you like best?

[00:05:17]>> Cheeseburgers, >> right? I can't decide either.

[00:05:23]>> But a chef character named Speedy to represent their system. the potential on the consumer side. Uh he saw it. Bingo.

[00:05:30]He saw it.

[00:05:31]>> And he asked them why they had not franchised it across the country. To which the brothers would reply that they did try and also failed because other owners could not maintain the system.

[00:05:41]But after over a year of begging them to do so, they would sign the contract that made Ray the exclusive franchising agent across America. And on paper, this did look like a great deal. As Croc would handle all the franchising and operations, he would be responsible for recruiting all franchises and helping them develop their speedy system. All while the brothers would retain ownership of their original location and still maintain ultimate jurisdiction over major changes to any future franchise while also collecting 4% of gross sales from every location.

[00:06:12]>> They could not add an item that they couldn't make a single change of any kind without the written approval of the McDonald brothers. And so by April 1955, just 6 weeks after securing the partnership, Croc would open his first franchise. And really from the very beginning, this partnership had disagreements on both structure and execution. understand that the franchisee would pay a measly $950 as their franchise fee, which was far below standard at that time, which was largely because Ry was targeting small business owners and really the everyday common man to franchise McDonald's because he knew that they would treat it as more than just an asset in their portfolio.

[00:06:52]This was their chance to taste the American dream and Croc himself was responsible for setting up and ensuring the maintenance of every single franchise. I'm talking about everything from inventory management to staffing, training, marketing, and supporting these new stores. As Croc really wanted to grow fast and experiments and on the other hand, the brothers really wanted to protect their original vision and move really slow.

[00:07:15]>> There was a little friction began to build up because Ray thought we had too much control on them. See, >> and after only a year into their agreement, Ray's back was against the wall. He had mortgaged his house to expand the franchise chain. The 1.4% 4% that he was collecting was not covering his business expenses. And every time that he would call to restructure their deal or ask for something, he was most likely denied.

[00:07:38]>> I made up my mind that if I ever got into the food business, I would do what this one was doing or what that one was doing, and I wouldn't do what that other one was doing.

[00:07:49]>> And this is when Ry would take matters into his own hands. He knew that competitive threats like Burger King were on the rise, and he needed to keep expanding rapidly. Now that's a hamburger.

[00:07:59]>> Something to be proud of.

[00:08:01]>> HEY, YOU'RE ALL RIGHT.

[00:08:07]>> Burger King.

[00:08:08]>> So this is when Ray would start tweaking small things without telling the brothers. Changes to the speedy system mainly. Basically, their original system was an old ass Ford quadricycle. And Ray wanted to make it a Model T. Hiring food scientists to create a potato seller for his fries. developing a new dispenser for increased condiment accuracy and many would compare his training of employees to the military. He also wanted more items on the menu, dining locations, and of course the extreme expansion.

[00:08:38]>> The organization cannot trust the individual. The individual must trust the organization. Any other way would be building on a marshy foundation that could collapse at any time. And obviously these small but unilateral changes would really erode their relationship. And still none of it was making Ray rich or even getting him a fair output in regards to what he was putting into the business. In fact, Ry was spending so much time trying to build his empire that even his relationship with his wife would fall apart. And it wasn't until a chance meeting with financial adviser Harry Sunborn when Ry would really see the path to making McDonald's a billion dollar empire.

[00:09:19]Give a hamburger to someone you like.

[00:09:22]Give some fries and a shake and make someone happy.

[00:09:27]Give a cheeseburger and pie to your favorite girl or your favorite guy.

[00:09:34]>> The year was 1956 and Ray was drowning in debt. And that's when a colleague introduced him to Sunorn who had major success in the real estate business with an ice cream franchise called Tasty Freeze. Sunonniborn had heard about the massive expansion of McDonald's, but when he dug deeper into their numbers, he knew that their financial model was not sustainable. And the guy's plan was actually pretty simple. Instead of just collecting royalties, McDonald's would buy up and lease the land under every restaurant and then subleasase it to the franchises at a markup, effectively making them a landlord of all these different growing communities all across the country. This would give Croc financial independence and massive leverage as this would create a revenue stream outside of their original agreements because it was technically real estate and not food sales. He was able to get the money from the bankers because they'll loan you money for real estate. They won't loan you money for a restaurant. This set the stage for McDonald's exponential profit margins.

[00:10:33]And from there, Ray was really riding a rocket ship. And there was really nothing the brothers could do about it other than to collect them easily 1 half% every month. While Sunborn, on the other hand, went on to be Ray's right-hand man and financial guru, eventually becoming the president and CEO of McDonald's. And not only would this put a strain on their business relationship, but it would also put the nail in the coffin for Ray's marriage, as he and his wife Ethel would divorce in 1961. So now the woman who had stood by his side for the last 35 years of him pursuing wild dream after wild dream was really kind of disposed of right as the money started flowing in. And not only that, but the man already had his eyes on someone else entirely. As back in 1957, Ray had walked into a Minnesota piano lounge and laid his eyes on a 28-year-old organ player named Joan Smith. And the guy was instantly obsessed. But not only was Joan already married to a Navy veteran named Rolley, but Ry was obviously still married himself. And obviously with his ruthless nature, he did not just pursue Joan, but he literally bankrolled her husband, setting him up with a lucrative contract to open the very first McDonald's franchise in South Dakota. So this man essentially built a multi-million dollar restaurant to low-key creep on this other dude's wife. But at the time, Joan did not want to leave her husband, chickening out after Ray tried to elope with her in Vegas. And so they instead just had a very long affair. And you have to also keep in mind that Ry married a second woman between that time named Jane Green. So he really started the cheating in 1957, got divorced for the first time in 1961, continued the affair while getting married again in 1963, and cheated on her until they called it quits in 1968, marrying the longtime mistress the very next year.

[00:12:19]Got it? I mean, it was beyond obvious at this point that to Ray Croc, everything in the world, whether it be land, contracts, or marriages, was really just an asset to be acquired. Because by 1960, Ray had opened over 200 franchises in America, and he was in clear control of the destiny of the company. Only the guy still had one small but very annoying thorn in his butt, which was the brothers still hanging around. By that time, they were making over $100,000 from their royalty per year, which is equivalent to over a million today. Obviously, Ray did not want to deal with them any longer. And so, after 6 years of doing so, he would ask them their magic number for a total buyout.

[00:12:59]I'm talking about the McDonald's name, their franchise agreement, and their speedy system. In the end, they wanted $2.7 million, which would be around 25 million today. This would obviously give Ray everything, while the brothers would retain their San Bernardino restaurant, but also have to rename it.

[00:13:17]>> To me, it was all inclusive. It was Irish to the Irish. It sounded Scotch to the Scotch. Uh it was a typical uh English American word. It flowed.

[00:13:31]McDonald's. It was easy for the kids to say and remember.

[00:13:34]>> And that is where Sunaborn came in once again securing the financing for the buyout through a loan from institutional investors. Really leveraging the real estate that they had garnered over the years to get the payout loan. And so by 1961, the brothers would sign the papers and say goodbye to their baby once and for all. I learned some new cuss words and I broke a few windows and I shut the door and screamed and hollered and I said, "Take it." And the lawyer and accountant said, "You're crazy." And I said, "That was established many years ago."

[00:14:05]>> And they would later note that they had some sort of handshake agreement with him to retain a 1% royalty on all profits from McDonald's in perpetuity.

[00:14:13]But they claimed that in the end, this handshake agreement was never honored by Ry. And while 1% might not sound like a whole lot when you were considering the size of this massive pie in the current day, that 1% would currently be worth about $1.38 billion today. And obviously, this left them and really their future descendants infuriated for decades to come. Did your grandfather ever mentioned Ray Croc to you?

[00:14:37]>> Not really. Ray Croc was kind of a touchy subject. Why would we be bitter over something that my grandfather wasn't bitter over?

[00:14:44]>> Well, there's a 100 million reasons you could be.

[00:14:46]>> Yes. Yes. Yes.

[00:14:48]>> And another major point of contention after the buyouts was Ray's decision to open a McDonald's franchise near the brother's original San Bernardino restaurant that, like I said, had been renamed the Big M, which effectively drove them right out of business.

[00:15:03]>> When we sold out to him, boy, we were shocked. We started reading the media.

[00:15:08]Ray Croc, founder of McDonald's.

[00:15:11]And uh so we weren't too we weren't too too happy about that.

[00:15:16]>> And so after he took full control, Ray expanded like crazy. And by 1965, McDonald's was a publicly traded company worth over $und00 million.

[00:15:26]>> McDonald's became the first fast food company ever to go public. Stock was issued at $22.50 a share. Even almost 20 years later up until his death in 1984, Ray was directly involved as the senior chairman of the company. And during that time, he would expand in multiple ways, adding items like the fish fillet, the Happy Meal, and the Egg McMuffin, >> sausage McMuffin with egg, >> while also making the Big Mac their signature item.

[00:15:53]>> McDonald's new Big Mac sandwich for the bigger than average appetite.

[00:15:58]>> McDonald is your kind of place.

[00:16:02]He did this while also heavily investing in marketing the Golden Arches aspect of their branding. Obviously, at some point, the clown would come along and by 1975 they would also begin to utilize the drive-thru.

[00:16:14]>> Presenting McDonald's New McFlurry.

[00:16:17]>> Oh, yeah.

[00:16:19]>> Did somebody say McDonald's?

[00:16:21]>> And by the time of Ray's passing, they had over 8,300 McDonald's restaurants producing companywide revenue in the tens of billions of dollars. McDonald's was now a symbol of American culture.

[00:16:32]And Ray would be engraved in the history of fast food restaurants and real estate forever. So love him or hate him, you cannot deny that Ray Croc took a local restaurant concept and turned it into a global empire that changed how the entire world eats. The man was relentless, sometimes ruthless, and deeply flawed. I mean, the guy left his wife of 35 plus years as the money started pouring in. He had a long affair and would marry his mistress after a decade. Obviously, he steamrolled the original founders, but he also had an unmatched vision and work ethic. So, what do you guys think? Was Ry really this villain that stole McDonald's, or was he just a guy who took a good idea and made the brothers and thousands of other people rich? I feel like the truth is likely somewhere in the middle. I mean, hey, without him, I would not have those memories with my grandfather, but maybe I'd also have a couple less pounds on my body. Not that I currently eat McDonald's today really ever. And no matter how you feel, I think that we can all agree that if you look at a McDonald's today, it's hard not to notice how much has changed. And honestly, if Dick, Mac, or Ray Croc walked into a modern location right now, it would have their heads spinning just for completely different reasons. The McDonald brothers would look at the corporate sterilization, the automated kiosk, the massive complicated digital menus, and obviously the cold, very impersonal atmosphere and feel like the soul was entirely ripped out of their company. And obviously Ray Croc was the ruthless corporate guy, but he was also a perfectionist about hospitality, ensuring that every franchise had a very strict discipline and of course that razor sharp customer service. I mean, at this point, they heavily rely on their glitchy mobile app. They have understaffed drive-throughs. They have long wait times, the broken ice cream machines. And it's honestly like the very thing that freed Ray Croc, which was the real estate play, has now become like the only thing they care about. I mean, the burgers, the service, the customers, that's really just all keeping the lights on. But yes, in the end, one thing is really undeniable.

[00:18:31]That one single visit to look at eight milkshake machines changed fast food and American culture forever.

[00:18:44]Now, I feel like that was really fun.

[00:18:46]This is definitely right in line with the type of videos that I want to make, including my recent metaverse video and also the video I made on the fraudulent activity of the Neelk Empire. So, I hope you guys will stay along for the ride.

[00:18:58]And if you want more deep dives into business stories, for example, like the fast food wars of the 70s and 80s, which I plan to make a video on soon, let me know down below in the comments. And while you're there, I also want you to drop your McDonald's story, too. But either way, guys, I do want to thank you all for watching today's video, dropping a like and subscribing. But as you guys know, it's been your boy, the Tan Superman, and some other fast food stories out here need to be covered. So, I'm out. Peace.