The Major Shareholder
Chicago. Home of McDonald's headquarters.
Looking at Ray Kroc and the McDonald's directors, Kijo thought how many threads of fate had drawn him this far. If Soon-young and Ma-ryang had not saved Hee-ja and Roberts, he would never have come. If Hee-ja's brother, Park Hee-jun, had not sought him out in Korea, a tie to McDonald's would have been nearly impossible. And without his connection to Chairman Park, he would not be meeting these people now. Events that looked like chance had forged link after link of acquaintance, and those links had set him in this chair. The thought left him deeply moved.
The feeling did not last.
Kijo reminded himself that he owned a quarter of McDonald's. He was a major shareholder. He also remembered that, to these white Americans, he was an Asian they were inclined to look down on, and that he could not afford to seem a naive Oriental in their eyes. He had poured nearly every dollar earned in the fifties into McDonald's. Having gone all-in, he meant to leave no doubt that he was a serious investor, and that he had a voice in how the company was run.
He took his seat, and Ray Kroc introduced the directors. As Kijo had expected, the heavyset middle-aged man was Harry Sonneborn, his partner in running the company; the trim young man was Fred Turner, McDonald's future CEO; and the tall, spare woman was June Martino, the executive who kept the books. After the greetings, Kijo spoke, calm and unapologetic.
"We don't have much time together. In three hours I leave for Washington with the president of Korea, so let's not waste it."
By calling Chairman Park the president of Korea, he made it plain that he was a businessman traveling in the president's retinue. Showing off had never been his nature, but with Americans he did the opposite. Premature humility in front of them, he had decided, was poison.
"Accompanying the president — that's something. I hear you're the only businessman traveling with him."
At Ray Kroc's words Kijo gave a slight smile, then said, "Shall we start with the company's results?"
June Martino handed him the report she had prepared: a ledger of performance from 1959, the year Kijo invested, through the third quarter of 1961. McDonald's was growing at a breakneck pace. Margins and growth were solid. There was nothing to fault. Had Ray Kroc not fallen in with a swindler named Clem Bohr, the company could have grown smoothly without any infusion of outside capital. Kijo was in a position to thank the man. Clem Bohr was practically a benefactor — the reason he had been able to force an equity stake into McDonald's at all.
He read through the accounting report, then the business report. A few things snagged his eye, and he raised them with Ray Kroc.
"You're considering a change of cola supplier?"
"Yes. Pepsi offered to supply the cola cheap if we'd put up their billboards."
Kijo wiped the expression from his face.
"Do not change it. Ever. Coca-Cola is the only cola we handle. Don't go partnering casually with a second-place company. McDonald's has to look as if it deals in nothing but the best. Stay with Coca-Cola to the end — until customers half wonder whether McDonald's and Coca-Cola are the same company."
Spoken that flatly, neither Ray Kroc nor Harry Sonneborn raised another objection. Kijo moved to the second point.
"Why are you looking at changing the bun?"
"Cost. Customers would have a hard time noticing a cheaper bun, and cutting the unit cost by just ten percent lifts the margin a great deal."
Kijo nodded, for the moment. Unlike the McDonald brothers, Ray Kroc was a businessman to the bone. He had even fought them hard over milkshakes: the brothers insisted a shake had to be made with real milk, while Kroc held that powder would do. Powder slashed the cost of ingredients, meant fewer refrigerators in the stores and fewer mixers running, and so a lower electric bill. It also cut preparation time sharply, and he had shoved it through over every objection. A powdered shake lost some of the richness of milk, but a heavier sweetness could fool the tongue.
Kijo put the question to the man who was ruthless about cost.
"Where's the new bun?"
"At headquarters."
"I'd like to taste the one you mean to switch to. I'll compare it with the original and decide then."
At a look from Ray Kroc, Fred Turner started up to fetch the buns. Kijo stopped him.
"No point bringing them here. Let's go to the store closest to this hotel. I'll eat a hamburger made with the new bun there."
Fred Turner sat back down. Ray Kroc, and with him Harry Sonneborn, Fred Turner, and June Martino, looked plainly thrown. An Asian investor out of a backward country was being so exacting that they seemed unable to keep their footing.
As Kijo required, Ray Kroc led them to a McDonald's near the Drake Hotel, while Fred Turner went to headquarters for the buns. The store sat a little off from the downtown where the hotel stood. Stepping out of the car, Kijo took in not only the shop but the whole commercial strip around it. McDonald's had planted itself off the main streets, on ground that looked cheap. Rather than storming the city center, it was spreading its reach from the urban fringe.
He studied the store itself. The lot was spotless, not a scrap of litter, and even in the morning a fair number of cars were rolling through the drive-through. He took a long look at the clothes of the people passing by, then went in.
The moment he stepped inside, he saw the toy display he had ordered installed. On it were toy radios and electronic toys that Cheongsan had made in partnership with Sanyo. He put the question directly to the franchisee Kroc had brought along.
"How many toys go out in a day?"
The owner looked bewildered at a question from an Asian he had never seen, but once Ray Kroc explained who Kijo was, he smiled.
"Mostly weekends. They sell when moms and dads bring the kids in. On average, about forty a day."
Kijo nodded and looked around the store. As the man had said, families seemed more numerous on weekends; there were fewer of them here than the drive-through customers he had watched outside. He pointed at the toy case and turned to June Martino.
"Ms. Martino, how do these toys look to you?"
"I'm sorry?"
She had not caught his meaning, and it showed. Looking at her, Kijo thought of Jin Hyun-kyung. Both were tall and thin, and both were mothers raising children. He spoke gently, the way he would have spoken to Hyun-kyung.
"Don't answer as a director of McDonald's. Answer as a mother who's brought her children here. Do you want to buy them these toys?"
June looked at the case through a mother's eyes and gave a small shake of her head.
"You don't particularly want to, do you?"
"No... Honestly, I don't."
Kijo smiled at her. Just as Ray Kroc's autobiography described her, June was a frank woman. He fixed his gaze on Kroc.
"The way I see it, the toys we sell catch a child's eye, but they don't do much for the parents. They look cheap, and the money feels wasted. We ought to move them upmarket, so a parent feels it was worth buying a child a McDonald's toy."
Ray Kroc nodded. A businessman to his marrow, he felt the problem Kijo had named. What he could not feel was how one went about making them upmarket.
"Do you have an idea for that?"
Kijo smiled. "You know Walt Disney?"
"I do."
"How well?"
"We served in the same unit in the First World War."
Kijo nodded. He had asked knowing from the start that the two had been army comrades.
"Then you could go to Walt yourself and tell him McDonald's wants to sell Disney character toys."
"That was... so long ago. Honestly, I'm not even sure Walt would remember me."
"He might not. But he's a businessman too, isn't he? Play up the old connection — and play up that this is a chance for him to make money selling Disney character toys."
Ray Kroc nodded. A man who had come up as a salesman, he would have trusted himself to persuade. Still, Walt Disney had grown into such a giant that the prospect seemed to weigh on him. Kijo did not slack the reins.
"Have you been to Disneyland?"
Ray Kroc said he had. Kijo asked Harry Sonneborn and June Martino as well. All of them had.
"Was it crowded, or empty?"
Crowded, all of them said.
"And is there a McDonald's in Disneyland, or isn't there?"
Their faces said they had missed something large.
"Mr. Kroc, I would very much like a McDonald's inside Disneyland."
"Yes. I understand what you mean, Mr. Lee."
Kijo spoke to Ray Kroc, who had broken into a sweat. "The business report I saw earlier shows McDonald's concentrated in the Midwest. Put a store in Disneyland, where travelers from all over the country pour in, and you advertise McDonald's to people in the East and the South without seeming to try. Even if Walt sets harsh terms, I think we should take them without condition. Tell yourself that even if it loses money, it puts McDonald's in front of the whole country — and get us into Disneyland."
"I'll do my best."
With the initiative fully his, Kijo moved farther into the store and pointed at the counter.
"Put a toy case by the register, too. Give the children who've already come through the door one more chance to beg, and a parent who's already opened a wallet may weaken. Oh, what the hell, it's a nuisance — just buy it. They can get there."
The franchisee brightened and laughed. A good idea, it seemed, had a way of leaping past race.
They looked through the kitchen and sat at an empty table, and Fred Turner arrived with the buns. He went into the kitchen, built the hamburgers on the new buns himself, and brought them out. Kijo understood why Ray Kroc had pushed Harry Sonneborn aside and set Fred Turner up as his successor. The man had worked from the bottom of McDonald's and could do everything.
A hamburger on the existing bun and one on the new bun were set before him. Kijo ate both slowly, savoring them. Everyone watched his face, tense. When he had finished, he cleared his mouth with cola and spoke.
"How much cheaper did you say the new bun was?"
"About ten percent."
"You may switch the buns."
Leave granted, Ray Kroc and the directors broke into wide smiles. Kijo laughed with them and let the strained air loosen.
It was 1961, and racial prejudice ran deep, but so long as he was a major shareholder of McDonald's, Kijo felt that being Korean was no handicap at all. He had also confirmed that the more assured he was in front of white men, the better his words landed. He thought how fine it would be if things went this way with the American officials waiting for him in Washington. However it went, he resolved, he would not lose that assurance before them.