A big one. You don't seem to realize what business you're in. You're not in the burger...
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Harry J. Sonneborn:So to summarize, you have a minuscule revenue stream. No cash reserves. And an albatross of a contract that requires you to go through a slow approval process to enact changes if they're approved at all.Ray Kroc:Which they never are.Harry J. Sonneborn:Am I missing anything?Ray Kroc:That about sums it up.Harry J. Sonneborn:Tell me about the land.Ray Kroc:The... land?Harry J. Sonneborn:The land, the buildings, how that whole aspect of it works.Ray Kroc:Oh, pretty simple really. Franchisee finds a piece of land he likes. Gets a lease, usually 20 years. Takes out a construction loan, throws up a building and off he goes.Harry J. Sonneborn:So the operator selects the site.Ray Kroc:Yeah.Harry J. Sonneborn:He picks the property?Ray Kroc:Right.Harry J. Sonneborn:You provide the training, the system, the operational know-how, and he's responsible for the rest?Ray Kroc:Is there a problem?Harry J. Sonneborn:A big one. You don't seem to realize what business you're in. You're not in the burger business. You're in the real estate business. You don't build an empire off a 1.4 percent cut of a 15-cent hamburger. You build it by owning the land upon which that burger is cooked. What you ought to be doing is buying up plots of land then turning around and leasing said plots to franchisees who as a condition of their deal, should be permitted to lease from you and you alone. This will provide you with two things. One, a steady, up-front revenue stream. Money flows in before the first stake is in the ground. Two, greater capital for expansion. Which in turn fuels further land acquisition, Which in turn fuels further expansion and so on and so on. Land. That's where the money is
Full Transcript
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So to summarize
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You have a minuscule revenue stream
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No cash reserves
00:00:07.073 --> 00:00:09.229
And an albatross of a contract that requires you to go through
00:00:09.309 --> 00:00:10.929
a slow approval process to enact changes
00:00:11.999 --> 00:00:12.831
if they're approved at all
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Which they never are
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Am I missing anything That about sums it up
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Tell me about the land
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The land
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The land the buildings how that whole aspect of it works
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Oh pretty simple really
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Franchisee finds a piece of land he likes
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Gets a lease usually 20 years
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Takes out a construction loan
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throws up a building and off he goes
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So the operator selects the site
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Yeah He picks the property
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Right
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You provide the training the system
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the operational know how and he's responsible for the rest
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Is there a problem A big one
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You don't seem to realize what business you're in
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You're not in the burger business
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You're in the real estate business
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You don't build an empire off a 1 4 percent cut
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of a 15 cent hamburger
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You build it by owning the land
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upon which that burger is cooked
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What you ought to be doing is buying up plots of land then
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turning around and leasing said plots to franchisees
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who as a condition of their deal
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should be permitted to lease from you and you alone
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This will provide you with two things
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One a steady up front revenue stream
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Money flows in before the first stake is in the ground
00:01:36.063 --> 00:01:39.486
Two greater capital for expansion
00:01:39.566 --> 00:01:42.001
Which in turn fuels further land acquisition
00:01:42.602 --> 00:01:46.999
which in turn fuels further expansion and so on and so on
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Land
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That's where the money is And more than that control
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Movie Summary
The story of Ray Kroc, a salesman who turned two brothers' innovative fast food eatery, McDonald's, into the biggest restaurant business in the world, with a combination of ambition, persistence, and ruthlessness.
