Many think that McDonalds and Starbucks are very similar due to their branding strategies and the number of outlets. In fact, this is not so. Many believe that McDonald’s success had a lot to do with real estate and not hamburgers – that’s not exactly the case, either.
If you read Howard Schultz’s book; “Pour Your Heart Into It” could change your opinion of Starbucks, as they are vertically integrated and own their own coffee fields, while Ray Kroc did not own the potato or beef fields. Simplot became one of the richest people in his day and ended up running basically all of Idaho.
Starbucks is the gem tenant of all retail malls, almost considered an anchor tenant, their stores are in extremely small spaces and they are basically selling a “drug”, attracting waves of customers. Many companies want to be next door to a Starbucks, such as Quiznos, Subway, hair cutting places, travel agencies, insurance offices, etc. Starbucks owns its own stores, they are not a franchise system like McDonalds.
In some respects, they can better control quality, consistency, cleanliness, and customer service; Somehow McDonalds has done an incredible job of training and systems administration, most franchisors never reach that “curtain” level.
Regarding Ray Kroc’s comment on real estate to the Harvard MBA class that “We are in the real estate business, not the hamburger business,” well, if you think this statement is the whole truth, you may want to rethink some of that. You see, Ray Kroc’s partner was a real estate guy and Ray Kroc got a little over his head and went through a bit of turbulent times.
Not that the real estate was not a good move, it saved his ass, however there is much more to the McDonalds story than simplifying it with a real estate story and those Harvard professors who try are, in my opinion, somewhat incompetent and have Obviously, he never ran a franchise business before.
Be careful what they teach about McDonalds, franchises are much more than real estate. It should not be simply assumed that McDonalds’ success is due to real estate or that Starbucks because Starbucks does not own their locations are in the cold, as they both serve hot coffee and have many customers to prove they have role models. successful.