Know Thy Customer

Michael Keaton as Ray Kroc in a scene from “The Founder”

Learnings from the Big Mac Daddy

By Gordon Hecht, YSN Contributor

There’s a business lesson in almost every book and movie.

The kiddie book “Green Eggs and Ham” teaches the effectiveness of alternate-choice closes. The 1992 movie “Glengarry Glen Ross” depicts the pressure of selling and the failure of hard closes.

Take time this week to watch (or re-watch) “The Founder.” Premiering in 2016, the film covers the life of McDonald’s founder Ray Kroc. The lessons in the film can affect the way you operate your business.

Stranger Than Fiction

The film is historical fiction. But the basic premise rings true. It starts in the late 1950s. The restaurant scene was populated by full-service eateries, small diners and drive-up greasy spoon snack-shacks. In an era when the country was moving fast, restaurant serving times ranged from 10 minutes to a half hour. Ray Kroc was a traveling salesman for a multi-mixer machine. It could make six milkshakes at a time. The goal was to speed up serving times.

Ray connects with Richard and Maurice McDonald. The brothers own a burger joint in San Bernadino, Calif. Through a well-vetted process, the McDonalds can deliver a meal to a customer in under a minute. There are no servers, no dishes — in fact, no tables or chairs. Grab and go and eat in your car, all at family-friendly prices.

Ray convinces the brothers to franchise the concept. It should be a sure-fire money machine. Except it isn’t.

The first few franchisees decide to go rogue on the business model. They add fried chicken and hot dogs. Install jukeboxes and reduce staff. In short order they destroy the family-style atmosphere and become just another drive-up dump.

Mr. Kroc regroups and buys out the early owners. He creates a set of standards. New franchisees need to follow the plan.

Who Are You?

You can decide how you operate your shop. But first you must decide what your shop stands for. It’s why you are unique in the marketplace. You target a specific audience, market to them, treat them right. You create loyal customers and raving fans.

McDonald’s targeted young people. They have no money, but a lot of sway with mom and dad. Mickey D’s became the ideal place to take your kids and not spend a ton of dough.

Wherever your shop is located, you have many market segments. A few wealthy people who buy no matter the market conditions. There’s also HENRY — “High Earners, Not Rich Yet.” They also spend on premium products and are happy to mortgage the future. Then there’s the middle class, where most of us reside. They want a durable product for a reasonable price.

And there will always be a part of your local community that will struggle. They buy just enough to get buy.

Each of the spending and buying levels require a different level of service. Always no hassle, but higher-end buyers want true concierge service. The bargain shopper may only need your help strapping their purchase to their trusty Ford F-150.

Pick a Price Tier

If you want to be unique and remarkable, you can’t be all things to all people. Premium buyers don’t want to shop in a bargain house. Middle- and lower-price shoppers will run if they see a five-figure-priced mattress at the front door.

The good news is that you can make money on any level of pricing and service. And you can serve multiple types of shoppers at multiple price levels. Two or maybe three levels.

Each community has its own sweet spot. Your factory reps can provide demographic information on the neighbors in your selling area. Shop your competition and look for the opportunities they are not serving.

You will be able to tighten your marketing efforts to concentrate on the most likely shoppers, thus having a more effective advertising effort. Why gain a million impressions on 990,000 people who have no interest in your merchandise!

Move with the Times

Setting your core business plan and market is a must. The way you reach your goals can vary with time. From Happy Meals to McRib to salads, McDonald’s has grown with its audience. You too can change as your population ages. Just never turn from glam to bland.

Times have changed since Ray Kroc ruled his empire. The Dollar Menu is diminished and the restaurants have changed from drive up to dine in. More than 60 years after Kroc started franchising locations, over 70 million people dine at the Golden Arches every day worldwide.

That’s what I call loyal raving fans.

Side Note: I was fortunate to meet Ray and Joan Kroc in 1980. I worked at an upscale San Diego furniture gallery in Mission Valley. Mr. Kroc was a regular guy. He chose to b.s. with the sales guys in the bullpen while his bride shopped our store. He seemed genuinely interested in our business and how we made a living. No matter what I saw in the movie or read online, that is how I remember him.