The McDonald Brothers

The McDonald brothers opened their first restaurant at 1938 North E Street in San Bernardino, California in 1940. Originally a barbecue drive-in, the brothers discovered that most of their profits came from hamburgers. In 1948, they closed their restaurant for three months, reopening it in December as a walk-up hamburger stand that sold hamburgers, potato chips, and orange juice; the following year, french fries and Coca-Cola were added to the menu. This simplified menu, and food preparation using assembly line principles, allowed them to sell hamburgers for 15 cents, or about half as much as at a sit-down restaurant. The restaurant was very successful, and the brothers started to franchise the concept in 1953.

In 1948, Mac and Dick McDonald introduced the "Speedee Service System", which helped to further the principles of the modern fast-food restaurant. However, they were preceded in this by two decades by William Ingram and Walter Anderson, founders of the White Castle hamburger chain. In addition to being the first to standardize the production of hamburgers at their restaurants, Ingram's and Anderson's White Castle System created the first fast food supply chain to provide meat, buns, paper goods, and other supplies to their restaurants, pioneered the concept of the multistate hamburger restaurant chain, standardized the look and construction of the restaurants themselves, and even developed a construction division that manufactured and built the chain's prefabricated restaurant buildings. The McDonalds' Speedee Service System and, much later, Ray Kroc's McDonald's outlets and Hamburger University all built on principles, systems and practices that White Castle had already established between 1923 and 1932.

After the McDonald brothers realized that most of their profits came from selling hamburgers, they closed down their successful carhop drive-in to establish a streamlined system with a simple menu of just hamburgers, cheeseburgers, french fries, shakes, soft drinks, and apple pie. The carhops were eliminated to make McDonald's a self-serve operation. Mac and Dick McDonald had taken great care in setting up their kitchen like an assembly line, to ensure maximum efficiency.

Their first franchisee was Occidental Petroleum executive Neil Fox, who opened a restaurant at 4050 North Central Avenue in Phoenix, Arizona, in May,1953 for a flat fee of $1,000. His restaurant was the first to employ the McDonald brothers' Golden Arches standardized architecture, which they had developed for their franchises. Fox's use of the "McDonald's" name evidently came as a surprise to the brothers, but all subsequent franchises used the "McDonald's" brand.

Fox's brothers-in-law and business partners, Roger Williams and Bud Landon, were the franchisees for the third McDonald's, and used their expertise in siting gasoline stations in choosing the Downey location.

The purchase of the chain from the McDonald brothers by Ray Kroc did not affect the Downey restaurant, as it was franchised under an agreement with the McDonald brothers, not with Kroc's company McDonald's Systems, Inc., which later became McDonald's Corporation. As a result, the restaurant was not subject to the modernization requirements that McDonald's Corporation placed on its franchisees. Its menu came to differ from that of other McDonald's restaurants, and lacked items such as the Big Mac that were developed in the corporation. In part due to these differences, the restaurant came to suffer poor sales, and was finally acquired by McDonald's Corporation in 1990, when it was the only remaining McDonald's that was independent of the chain.

With low sales, damage from the 1994 Northridge earthquake, and the lack of a drive-up window and indoor seating, the restaurant was closed, and McDonald's planned to demolish it and incorporate some of its features in a modern "retro" restaurant nearby. However, it was listed on the National Trust for Historic Preservation's 1994 list of the 11 Most Endangered Historic Places. With both the public and preservationists demanding the restaurant be saved, McDonald's spent two years restoring the restaurant and reopened it. Customers today can visit the original restaurant and an adjoining gift shop and museum.

In the early 1960s, McDonald's really began to take off. The growth in U.S. automobile use that came with suburbanization contributed heavily to McDonald's success. In 1961 Kroc bought out the McDonald brothers for $2.7 million, aiming at making McDonald's the number one fast-food chain in the country.

In 1965, McDonald's Corporation went public. Common shares were offered at $22.50 per share. By the end of the first day's trading, the price had shot up to $30. A block of 100 shares purchased for $2,250 in 1965 was worth, after 12 stock splits (increasing the number of shares to 74,360), about $1.8 million by the end of 2003. In 1985, McDonald's Corporation became one of the 30 companies that make up the Dow Jones Industrial Average.

The Third McDonald Bros. store in Downey, California is almost unchanged in appearance since it opened in 1953
1953 Prices
2002 Stock Certificate
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