What Business Are You Really In?

In the late 1930s, Patrick McDonald opened a food stand in Monrovia, California. Originally, the stand sold hot dogs, but—as you might guess from his last name—hamburgers were later added to the menu. A few years later, his sons Maurice and Richard moved the entire operation 40 miles east to San Bernardino. “McDonald’s Bar-B-Que” later shifted its focus from barbecue to a streamlined menu of burgers, drinks, and apple pie. The restaurant McDonald’s was born on December 12, 1948. Within a few years, other companies followed this lead and transformed into fast food establishments. Several of these, including Burger King and White Castle, are still familiar and successful today. Ray Kroc entered the picture in 1954. Ray, a milkshake mixer salesman, learned that the McDonald brothers were using eight of his machines in their restaurant, instead of just one like most other restaurants. Intrigued by the success that led to needing so many milkshake mixers, Ray offered to work as a franchising agent for the McDonald brothers in exchange for a cut of the profits. Just a few years later, there were 100 McDonald’s locations… but Ray still wasn’t making significant money. It wasn’t until 1961 that he hit upon the key and defined the business that McDonald’s is really in. Instead of taking a percentage of the profits from each franchise, he set up a system in which the company bought land, leased it to new franchises, and made their money that way. In other words, McDonald’s is actually in the real estate business rather than the hamburger business. The company’s unique ability isn’t to make amazing burgers, but rather to research and source ideal locations for their real estate acquisitions and franchises. What lesson can you take away from this? You’re not in the business that you think you’re in. For example, if you’re about to launch something, you’re probably selling the emotion of hope. If you’re in the coaching or consulting business, you’re selling the emotion of confidence. Interested in understanding this better? Tune into this episode! By the end, you’ll: Know the specific emotion you are selling to your target audience. Discover the true purpose of the business you’re in: precession. Learn why it’s easier to change market segments versus business model. In This Episode: [03:04] - We hear the three key insights that Alex will explore over the course of today’s episode. [04:23] - Alex shares the story of the early days of the McDonald’s empire. [09:36] - In 1954, Ray Kroc (FIND AND LINK THIS)  came into the picture. Alex talks about Ray’s ascension. [11:55] -  We hear about Ray’s big idea, and the secret to building the McDonald’s empire. [14:30] - If you’re in the retail business, your best strategy is to find out where the next McDonald’s will open in a city near you, because they’ve already done the research. [15:27] - Alex shares a takeaway from the story of McDonald’s and Ray Kroc. [17:45] - Alex makes a point about McDonald’s by exploring the story of the honeybee. [20:41] - We hear about a mistake that Alex has made over the years. [23:02] - Alex offers a quick review of the insights that he has covered in this episode. [24:56] - What was your biggest takeaway from this episode? Head to this link and post your answer as a review of the show! [26:36] - In honor of this episode of the podcast, Alex is giving away free access to his four-part video e-course series! You can find it here. Links and Resources: Alex Mandossian MarketingOnline.com Marketing Online 4-Part Video Training Series Alex Mandossian on YouTube Alexisms by Alex Mandossian All Selling Aside on iTunes Ray Kroc Richard and Maurice McDonald Peter Drucker Buckminster Fuller Precession Ryan Deiss