Ray Kroc
Monday, September 28, 1959. After a long and arduous flight, an American businessman arrived at Gimpo Airport. His name was Ray Kroc. He had traveled all the way to this distant land of Korea to resuscitate a business that had fallen into crisis.
Once a peddler of paper cups who later sold mixers and opened a hamburger chain, he had only just begun to earn real money when his enterprise was suddenly thrust to the brink of ruin. The man to blame was Clem Bohr, a contractor from Wisconsin. Bohr had come to McDonald's bearing a thoroughly convincing business proposal. He would travel the length and breadth of America seeking out sites suitable for McDonald's restaurants. Whenever he found an appropriate lot, he would purchase the land himself; the company need only construct the store.
From McDonald's standpoint it was a transaction with nothing to lose. He offered reasonable land rents, and joining hands with him would allow them to expand stores across the nation at low cost. To Ray Kroc, whose capital was insufficient, the proposal seemed so favorable that it felt like a stroke of luck.
But luck that seemed too good to be true did not last long. Clem Bohr, who had been in frequent contact, called less and less, and then one day word from him ceased entirely. Then a call came from the lawyer.
"Ray, a disaster has struck."
In that moment Ray Kroc intuited that the trouble had been caused by Clem Bohr.
"You established a senior lien on the land Bohr leased to us and went ahead with the construction, didn't you?"
"That's right."
"I looked into it. That damned bastard never bought the land. He didn't spend a single cent and simply pocketed the rent from us. The original landowners have stepped forward threatening to sue."
It was news like a bolt from the blue. Ray Kroc resolved to purchase the land wherever a store was under construction or already built. But the sum was the problem.
"Ray, we need at least four hundred thousand dollars. That's the bare minimum..."
Ray Kroc went to the suppliers who delivered goods to McDonald's in an effort to raise the four hundred thousand dollars. He managed, somehow, to scrape together three hundred thousand and was about to buy the land when the amount he was required to pay swelled to one and a half million dollars. It was utterly beyond him. Even if he liquidated every asset he possessed, Ray Kroc had only ninety thousand dollars. He made the rounds of the banks trying to raise the money, but no bank would lend one million four hundred thousand dollars to a man who ran hamburger stands.
It was then that Ray remembered the letter sent by a Korean.
If McDonald's runs into financial trouble, I am willing to invest.
It was a letter telling him to get in touch at any time. When he first received it he had not even managed a snort of laughter. He had been introduced as a businessman who made his money exporting U.S. military supplies and tungsten from Korea, yet the notion that an entrepreneur from the poorest country on earth wished to invest in him had seemed like a piece of comedy. Now that he himself had fallen into circumstances where he needed even that man's help, the laughter would no longer come.
Arriving in Korea, he decided that before he met the businessman named Lee Ki-jo he would first seek out the hamburger restaurant the man was said to operate in front of the Eighth Army headquarters. Having been badly burned once by the swindler Clem Bohr, trusting anyone did not come easily. He had come clutching at straws all the way to an impoverished nation in the Far East, yet he still possessed his pride. If he were cheated even by a Korean, he felt he would no longer wish to live.
Taking a taxi from Gimpo to Yongsan, he was startled by the hamburger restaurant standing before the U.S. Eighth Army base. An unfamiliar sign read Mac O, yet the appearance of the shop was no different from any McDonald's he had raised in America. It was as though a store from the United States had been lifted whole and set down in Korea. Ray Kroc's heart began to hammer. The excitement was akin to what he had felt the first time he visited the hamburger restaurant the McDonald brothers ran in Pasadena.
This is beyond anything I imagined...
Ray Kroc stepped inside the hamburger shop without hesitation. As he opened the door the Korean staff greeted him cheerfully.
"Welcome to Mac O!"
Ray returned a light greeting to the Koreans who spoke English well and looked around the interior. The place was packed with American soldiers. Mixed among them were women and children who appeared to be military families. Confronted with so thoroughly American a scene on distant Korean soil, the bridge of Ray's nose stung.
Ray went straight to the counter and ordered.
"What's the best-selling burger here?"
"The charcoal-grilled rib burger is our biggest seller."
Charcoal-grilled rib burger?
It was a menu item that did not exist in America.
"One of those, an order of french fries, and... a milkshake, please."
The Korean clerk named the price. It was roughly one-point-eight times what the same meal cost in the United States.
They can charge this much for a hamburger and it still sells? In Korea?
Ray could scarcely believe it. He took the set he had ordered, found a seat, and bit into the hamburger first.
Huh?
In that instant Ray Kroc understood that the price was fair. The proportion of scrap meat was low; he could taste a generous share of meat from the rib. The beef was rich with fat and juice, and the deep perfume of oak charcoal lifted the flavor.
Right... that man said Korea has no gas, so the meat has to be grilled over charcoal...
The words of the letter sent by the man named Lee Ki-jo rose fresh in his memory. Ray set the hamburger down and tasted the french fries. He could not help smiling.
They followed the recipe...
He knew it at a single taste. Plenty of American franchisees were careless about cooking to the manual, yet this Korean businessman had kept strictly to the recipe. Ray Kroc wiped the grease from his fingers on a napkin and this time drank the milkshake.
"Ah..."
The exclamation escaped him before he knew it. Ray set the milkshake glass down, buried his face in both hands, and muttered to himself.
"This is... the McDonald brothers' original recipe..."
He remembered the day he had first tasted the McDonald brothers' milkshake and felt a dizzying thrill run through his skull. The flavor had been the finest in the country. Yet once he began franchising he had replaced that costly original recipe with milkshakes made from processed powder. He knew the original tasted far better, but if he meant to make money he had had no choice. Powder was vastly cheaper than real milk and far easier to handle; the business advantages were simply too great. Ray Kroc went on muttering into his hands.
"This man Lee Ki-jo... he was actually running a real business..."
While he sat there the manager of Mac O approached and addressed him.
"Sir, is there something wrong with the food?"
Ray lifted his hands from his face and answered.
"No. I was only thinking of America for a moment. The food is excellent. Truly delicious."
At the praise the Mac O manager replied as though such compliments were routine.
"Please visit us anytime while you are in Korea. Mac O never closes."
When the manager had gone, Ray recalled everything that had led to this restaurant being built in Korea. He had asked the son of the Korean McDonald's franchisee who delivered Lee Ki-jo's letter how many American troops were stationed in the country. From what he heard, it seemed that serving the U.S. forces in Korea alone would be enough to keep a single store running, so he had accepted the proposal. In return he had added a condition of his own: if they could place a McDonald's inside a military PX, he would sign a franchise agreement.
When that intention was conveyed, the businessman said to have made a great deal of money in Korea asked that the blueprints, the manuals, and the equipment of the American McDonald's stores be sent to him. He would open a restaurant in front of the base and prove he was capable of operating a McDonald's. He offered to bear every cost and even swore he would never disclose that McDonald's equipment had been brought in; there had been no reason to refuse. Ray's own curiosity had played its part. Watching a businessman who, just as he himself had done when he built McDonald's, spotted a possibility and hurled himself at it with mad intensity, he had felt a kinship. Half in doubt, he had wanted to put the Korean to the test. And the Korean he had underestimated was, in Korea, truly running a McDonald's.
He is no swindler. Not possibly...
Ray Kroc lifted the hamburger and ate it slowly, savoring each bite. Somehow he would draw capital from this Korean businessman and return to America. A man like this was more than qualified to be a partner; he overflowed with the right. He would hand over the sales rights for Korea, Japan, and China that the man had asked for. It hardly seemed likely hamburgers could be sold in those countries anyway; he might as well give the rights away. Ray Kroc gradually quieted the excitement rising in his chest.
The last day of September 1959. Ki-jo stood in the departure hall at Gimpo Airport to see Ray Kroc off. Ray Kroc, soon to leave for America, offered his hand and spoke.
"You are the benefactor who saved McDonald's."
"I am no benefactor. I am only your partner."
When Ki-jo said it, Ray laughed and pulled him into an embrace. Ki-jo turned to Park Hee-jun, who stood beside Ray Kroc.
"President Park, I am sorry to lay so heavy a burden on you. I leave the matter in your care."
"Not at all. I was meaning to go to America anyway; I miss my family. I will see the McDonald's contract handled properly."
Hee-jun was to travel to the United States with Ray in order to carry out the agreement Ki-jo and Ray Kroc had signed. The contract itself was an unusual one. The million and a half dollars Ray Kroc needed would be extended as a loan through the bank of Roberts, Hee-jun's brother-in-law. Ki-jo would repay the borrowed sum. The money earned hauling tungsten would be used to pay Roberts's bank back over a long term—a kind of offset remittance. Without Syngman Rhee's permission there was no lawful path by which so large a sum in dollars could be sent to America. Even dollars sitting in an account under CIA protection might raise questions if a million and a half vanished all at once.
In exchange, what Ki-jo secured was twenty-five percent of McDonald's stock—a little more than the shares Ray Kroc had given, in the history Ki-jo remembered, to the insurance company that lent him the same million and a half. He also obtained the sales rights for Korea, China, and Japan. Ki-jo watched Ray Kroc and Hee-jun walk out through the departure gates together. He was glad Ray Kroc had made his decision and come to find him, and grateful that Hee-jun was helping as though the business were his own. He watched the Northwest Airlines airliner carrying the two men lift from the field and turn toward America.
Climbing into the jeep parked in front of Gimpo Airport, Ki-jo drove slowly back toward Seoul. As he drove, a question Hee-jun had asked returned to him.
"Don't you regret spending the million and a half you've earned on a hamburger stand?"
At the question Ki-jo had smiled.
"I don't regret it. If I had more money, and if the man had been willing to let me invest further, I would have put in three million."
"That much?"
Hee-jun had been astonished. Ki-jo had urged him to invest in McDonald's as well, but Hee-jun had declined.
"I'd rather put my money into the fertilizer plant or the power-tiller factory you'll be running, President Lee, than into McDonald's."
If the man himself refused, there was nothing to be done. Ki-jo had had his reasons for urging the investment. The twenty-five percent of stock received for a million and a half dollars put into McDonald's would, within a few years, be worth ten million—an investment that could return roughly sevenfold. Yet if one simply endured the company's steep climb through the nineteen-sixties and sold around 1973, the shares could bring something like five hundred million dollars. Bear the wait for fourteen years or so, and selling the McDonald's stock would furnish the capital needed for heavy industry. Even after the shares were sold, Ki-jo would still hold the sales rights for Korea, China, and Japan, and could go on making money from those. Neither Hee-jun nor Ray Kroc himself understood the true value of the investment.
Conceiving his plans for that distant future, Ki-jo drove carefully on toward Seoul. He was taking the slow road, but it was a certain one.