What can entrepreneurs learn from the movie, The Founder? Last year I reviewed Ray and Joan, which is largely about the relationship between Ray Kroc and his second wife, and her philanthropic efforts after his death. The movie focuses much more on the early existence of McDonald’s, and Kroc’s move to expand into franchises and eventually push out its true founders, the McDonald brothers.

Setting aside the question of who should truly be considered the founder(s) of McDonald’s, what insights did Kroc and the McDonald brothers have about how to run a business?

  1. Make customers supply some of the labor. Early drive-ins were full service, with carhops walking around to fetch trash and dirty dishes when the customer was finished. The McDonald brothers had to train their customers to throw away their own trash, a paradigm shift that is hard to imagine today.

  2. Make customers supply some of the capital. In the movice, Kroc is suprised when he orders a McDonald’s burger and it comes in a wrapper, with no silverware. “How am I supposed to eat it?” he asks. “And where am I supposed to sit?” McDonalds leveraged the fact that every customer arriving at their drive-in had a car, which came equipped with chairs–there was no need for them to supply a place to sit, since customers were literally bringing chairs with them.

  3. Take a scientific approach to production. As the movie shows, a McDonald’s kitchen was really more like an assembly line in a factory. This reminded me of Matt Yglesias’ great piece from a few years ago on Taco Bell as “a series of small factories on which assembly line workers construct faux Mexican food.”

  4. Mechanize as much as possible. Kroc was introduced to the McDonald brothers when they ordered several of his Multimix milkshake blenders, which could mix five milkshakes at once. He is also impressed, on his first tour of their restaurant, by the devices that measure out precise amounts of ketchup and mustard. “Who made these?” he asks. “We did,” the brothers explain.

  5. Shrink your staff to the minimum viable. This is a result of the first four points: once you transfer some of the work to customers, optimize your processes, and automate away whatever you can, this leaves you with a much smaller staff. It also means that the staff you do have are supplying much more added value than they would with a larger, bloated workforce, and they can be rewarded for doing so.

  6. Focus on what sells. The brothers’ earlier restaurant had a much larger menu, including hot dogs and other dishes. However, they realized that three items contributed to 87 percent of their sales: hamburgers, fries, and soft drinks. By focusing on this reduced menu and optimizing these products, they were able to better serve their customers.

  7. Anticipate customers’ needs. By reducing their menu (#6), customers were left with a small number of options about what to order. Thus, McDonald’s employees didn’t need to wait for a customer’s order to know what they wanted: it was likely to be some number of hamburgers, fries, and sodas. These could be made in advance and handed out to the customer almost immediately. Kroc is very surprised by this approach at first. “But I just ordered,” he says. “I know,” the employee tells him.

  8. Iterate, iterate, iterate. Unsurprisingly, their hamburger drive-in was not the brothers’ first experience in the restaurant business. Earlier, they had sold hot dogs and orange juice (what a combination). At one point, they close the burger stand and map out their kitchen on a tennis court. They design and redesign the optimal layout, choreographing the workers at each step.

  9. Cater to your most desirable customers. Many drive-ins earned a bad reputation by catering to teenagers hanging out in cars and causing trouble. McDonald’s established itself as a family restaurant, and discouraged customers who produced negative externalities for others.

  10. Find alternative business models. If someone like Ben Thompson were writing this post, this would likely be #1. Kroc’s innovative efforts at financing made McDonald’s a real estate business that happened to sell hamburgers rather than the other way around. This is detailed in a recent article by Chase Purdy.

These ten lessons encapsulate how McDonald’s became “an overnight success, 30 years in the making.” There is also some amount of “right time, right place” in their story. The brothers got their start in a growing suburb in a booming postwar economy. They were also helped by the ubiquity of automobiles and the mild Southern California climate: it is hard to imagine a walk-up or drive-in restaurant prospering as well as theirs did in Seattle or Boston. The Founder is both an entertaining movie and an interesting look at one of the world’s biggest corporate sucess stories.