Food Franchise Origins – WIF Fast Food

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Origins of Famous

Fast Food Franchises

Besides baseball and apple pie, is there anything more American than fast food? It’s a staple of American culture that is both loved and hated all over the world. We’ve talked about some of the secrets behind the biggest fast food behemoth in the world, McDonald’s, but how did other fast food giants get to the point where they are now?

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10. Carl’s Jr.

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Carl Karcher was born January 16, 1917 in Upper Sandusky, Ohio. He dropped out of school when he was 13 and worked on his family farm for the next seven years. When he was 20, he got a job making $18 a week working for his uncle at a feed store in Southern California. In 1941, Karcher was working in a bread factory and managed to get a $311 loan against his new Plymouth sedan. Using the loan and $15 out of his wallet, Karcher bought a hot dog stand and served them outside the Goodyear plant in South-Central Los Angeles. Sales were going well, and more hot dog carts were bought. What slowed down business for a bit was when Karcher went to serve in World War II.

When Karcher returned from the war, he opened his first restaurant, Carl’s Drive-In Barbeque in Anaheim, California, in 1945. In 1956, he opened two other franchises, which he called Carl’s Jr. That was the start of the spread of Carl’s Jr. and by 1975 there were 100 franchises. In 1981, they opened their 300th store and then they went public in 1982.

Karcher would go on to be the CEO after going public, but his ultra-right political leanings got him into hot water with shareholders and some feminist and gay rights groups. Also, in the late 1980s, Karcher was accused of insider trading. He called the allegations “totally false”, but still agreed to pay a fine of $332,000 in July of 1989. In 1992, a new CEO was put in place and Karcher died on January 11, 2008 at the age of 90.

9. Wendy’s

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Born Rex David Thomas on July 2, 1932, in Atlantic City, New Jersey, the Wendy’s founder didn’t have a great childhood. He was adopted as a baby and never knew his real mother. When he was five, his adoptive mother passed away and by the time he was 10, he had lost two stepmothers. The person that Thomas was closest to was his adoptive grandmother, who taught him valuable life lessons, like not cutting corners; that’s why Wendy’s hamburgers are square.

When Thomas was 12, he first started working at a barbeque restaurant. When he was in grade 10, he dropped out to work full time. He served in the army and when he got back from Korea, he learned that his former boss at the restaurant he worked at was an early franchise owner of Kentucky Fried Chicken. Thomas was hired on by his former boss to help him turn around some of his KFC franchises. Eventually, Thomas came to own some of his own franchises, but he would sell them back to the corporation in 1968 for $1.5 million.

The story as to how Wendy’s first came to be is that Thomas would often complain that there wasn’t a good place in Columbus, Ohio to get a burger. So on November 15, 1969, he opened his first Wendy’s, which was named after his daughter Melinda Lou, whose nickname was Wendy. She was even the store’s mascot and would sometimes be on hand, in costume, to welcome customers. The restaurant was immediately popular and within a decade there were over a 1,000 franchises.

In 1982, Thomas stepped down from the day-to-day operations, but in 1989 he had a large role in driving sales up when he became the spokesperson. He appeared in all the commercials in the 1990s and 90 percent of Americans recognized him. Thomas was also made national spokesperson on adoptive rights by George H.W. Bush, and due to his work with adoptive rights President Clinton signed a bill giving a tax credit to adoptive parents in 1996. Thomas died at the age of 69 on January 8, 2002.

8. Burger King

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By 1952, McDonald’s in San Berdino had become famous and attracted a lot of people from across the country. Some of those people were fascinated at how McDonald’s ran their business and looked to open up a similar restaurant. Two of those men were Matthew Burns and Keith G. Kramer. Burns invited Kramer, who was his stepson, out to California to visit the McDonald’s. Kramer was the owner of a drive-in restaurant in Florida and Burns wanted to see what he thought of McDonald’s. Seeing opportunity in cooking burgers and fries quickly, Burns and Kramer contacted an inventor and he created two machines for them. One was a milkshake maker that made a number of shakes at one time. The other was an “Insta-Broiler” which could cook 400 burgers in an hour. In 1954, Burns and Kramer opened the first restaurant, called Insta-Burger King, in 1953 in Jacksonville, Florida. They sold burgers and milkshakes for 18 cents, or for 10 cents you could get fries or a soft drink.

In 1954, they sold some franchises to two Cornell graduates, David Edgerton and James McLamore, who opened their stores in Miami. The problem was that Edgerton and McLamore weren’t making any money. So they changed the name to Burger King, got rid of the Insta-Broiler, and introduced the flame broiler. They also introduced a new burger called the Whopper, and did something a bit risky when they introduced it – they priced it at 35 cents, which was more than double a McDonald’s burger, which sold for 15 cents. The Whopper was instantly successful and became their trademark burger.

In 1959, more stores began to run into problems, so the original owners were bought out by Edgerton and McLamore in 1959. In 1961, they started a massive push to franchise Burger Kings across the country. By the time they sold the company to Pillsbury in 1967 for $18 million, they had 274 stores throughout the United States. Today, Burger King is the second biggest burger chain in the world, just behind McDonald’s.

7. Subway

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Subway got its start in 1965, when 17-year-old Fred DeLuca got a $1,000 investment from a friend of his family’s, Dr. Peter Buck. Buck suggested using the money to open up a sub shop because it would be a good way for DeLuca to pay for college and medical school. On August 28, 1965 DeLuca opened Pete’s Super Submarines in Bridgeport, Connecticut. However, on the radio ads, it sounded like “Pizza Marine,” so they changed the name to Pete’s Subway and later just to Subway.

In 1974, DeLuca started franchising and he went through a bit of a learning curve, but he was soon able to jump from 16 stores to 200. Then in 1987, Subway really took off and since then, 1,000 Subways open every year. As of mid-2015, Subway is the biggest restaurant chain, with the most franchises in the world.

6. Taco Bell

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Born on September 3, 1923, Glen Bell served in the Marine Corps in World War II and when he returned home, he lived in San Berdino, California. In 1952, he opened a hot dog stand called Bell’s Drive-In. His stand wasn’t too far from this hamburger stand that was run by two brothers named McDonald.

After buying a few more hot dog stands, Bell was looking for ways to expand his business. He was a fan of Mexican food, especially tacos, but the problem with serving tacos was the way they were made. Restaurants would use soft tortilla shells, stuff them with beef, cheese, lettuce and sauce and then fry them. It was a timely process, especially if you had to make a bunch at once. Bell then had the idea to fry the tortillas first and then stuff them. He had a special wire built that would allow him to cook the tortillas in the U-shape, thus giving birth to the hard shell taco. He then sold the tacos for 19 cents apiece from the side of one of his stands. Bell said he remembered the very first customer: a man in a suit who, as soon as he bit the taco, the juice ran down his sleeves and stained it. The man also got some sauce on his tie. Bell was convinced that they had lost him as a customer, but after finishing the first one, he came back and bought another.

By 1954, Bell and a partner opened Taco Tia, his first Mexican-food dedicated restaurant. By 1957, they had four restaurants and his partner didn’t want to expand beyond that, so Bell sold his share of the business and in 1957, he opened another Mexican restaurant in Pasadena called El Taco. He got three partners a year later and they opened four stores. But again, Bell sold his interest in the restaurants.

In 1962, with a $4,000 investment Bell opened the first Taco Bell in Downey, California. Over the next two years, he opened eight Taco Bells. In 1978, Bell sold Taco Bell to PepsiCo for $125 million. PepsiCo then expanded the brand to the juggernaut of 6,600 restaurants, famous for selling its diarrhea-inducing food. Bell passed away in January of 2010.

5. Domino’s

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In 1960, brothers James and Tom Monaghan bought a small pizzeria called DomiNick’s in Ypsilanti, Michigan for $500 down and then had to borrow another $900. Tom grew up in a series of foster homes and didn’t have much money so the pizzeria was meant to pay for his tuition at the University of Michigan, where he was studying to be an architect. After a 15 minute lessonfrom the former owner on how to make pizza, the very first Domino’s was up-and-running. After about eight months, James sold his half of the partnership for a Volkswagen Beetle they used for deliveries. By the way, wondering how it became Domino’s? When Tom Monaghan wanted to expand the business, the former owner, whose name was Dominick wouldn’t let him use the name, so he changed it to Domino’s Pizza, which was a suggestion from a delivery driver.

Other fast food places on this list either had an innovative product or copied McDonald’s. Domino’s is interesting because pizzerias have been in America since 1905 and pizza really got popular after World War II. Men serving in Italy brought back the cuisine with them. So how did Monaghan, who had a 15 minute lesson in making pizza, make Domino’s the dominant pizza company in the whole world? Well, it was their delivery system that made them stick out. Monaghan said he got the idea after he went to a seminar and met Ray Croc from McDonald’s and John Y. Brown from KFC.

By focusing on delivery, Domino’s developed a few innovations that would change the industry. For example, it is believed they developed the modern pizza box in the early 1960s. The boxes could be stacked and they were vented, meaning drivers could deliver more pizzas on one trip. Amazingly, they never patented the box. The other innovation that helped push the business was 30-minutes-or-it’s-free for deliveries. Monaghan said that helped push the business as much as anything. However, the company had to stop the promotion in 1993 after a Domino’s delivery driver ran a red light and hit a woman.

Today, Domino’s is the biggest pizza chain in the world, but second in America, just behind Pizza Hut. In 1998, Tom Monaghan sold his share in the business for a reported $1 billion. After living the life of extreme luxury, Monaghan is currently involved in Catholic philanthropy and activism.

4. A&W Restaurants

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Born September 30, 1882, in Illinois, Roy W. Allen moved out to California to renovate and run hotels. While there, he met a chemist who claimed that he had perfected the recipe to root beer. So Allen tried it out at his hotel and saw that the chemist did indeed have a great root beer recipe, and bought the rights to sell it. Using the recipe, Allen opened a root beer stand in 1919 in Lodi, California. Three years later, Frank Wright, an employee of Allen’s, became his partner in the root beer business and the name was born from their initials.

In 1924, Wright sold his share of the company, but Allen pushed forward with the name into an even bigger plan. He wanted to make A&W the first chain of roadside restaurants in America. Amazingly, by the mid-1930s, there were over 200 A&W Restaurants across America. Many of them were different from each other and the only thing they had in common was the root beer. In 1950, Wright retired and sold A&W to a businessman from Nebraska named Greg Hurtz. The contemporary age of A&W didn’t happen until 1966 when it was bought by the United Fruit Company.

3. Dunkin’ Donuts

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When William Rosenberg was in the 8th grade, he dropped out of school. When he was 17, he got a job with an ice cream vending business, and worked there for 10 years, rising in the ranks from a deliveryman to supervisor. During World War II, he was an electrician at Bethlehem Steel. After the war, he cashed in $1,500 worth of war bonds and borrowed another $3,500 and started a catering company called Industrial Luncheon Services. Only able to buy one truck after the war, Rosenberg bought 10 taxicabs and converted them so that the sides would open up. This was one of the first canteen trucks and a huge step in mobile catering. Rosenberg’s fleet grew to have over 200 trucks, but what he noticed was that 40% of all his sales came from two items – coffee and donuts. This led to him opening his first donut and coffee shop, called Kettle Donuts in Quincy, Massachusetts, on Memorial Day in 1948 where he sold donuts for a nickel and coffee for a dime. The name was changed to Dunkin’ Donuts in 1950.

At the time when Rosenberg wanted to franchise, it was considered a horrible practice. In some states it was illegal and companies that were franchising weren’t allowed to advertise in publications like the New York Times and The Wall Street Journal. So Rosenberg and 16 friends created the International Franchise Assn., which was a group made to uphold standards in franchising; thus paving the way for franchising in America.

In 1963, Rosenberg handed the day-to-day business over to his son, but was a lifelong consultant to the empire he started. He died in September of 2002. Today, Dunkin’ Donuts is in 36 countries with over 11,000 franchises.

2. Dairy Queen

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J.F. McCullough, owner of the Homemade Ice Cream Company in Green River, Illinois, had come up with a process of making ice cream soft, instead of hard. McCullough and his son/business partner convinced family friend and customer Sherb Noble, who ran Noble’s Ice Cream shop, to sell their soft serve in a unique promotion. They offered customers a chance to eat all they could on one specific day for 10 cents. On August 4, 1938, they ran the promotion and it attracted 1,600 people. Two weeks later, they held another all-you-can-eat soft serve day and it was just as successful.

A problem with the ice cream was that they needed to keep it at exactly 32 degrees, but freezers at the time couldn’t keep a steady temperature like that. They placed an ad in the newspaper looking for someone to solve the problem and were contacted by a man named Harry Oltz, who had a patent on a freezer that did just that. The McCulloughs partnered with Oltz, in a deal where they would split the country. The McCulloughs had the exclusive rights to Oltz’s freezers in the West, while Oltz had the East. They also gave Oltz a percentage on all the ice cream they sold.

The first franchise was opened by Sherb Noble in Joliet, Illinois on June 22, 1940. They sold the ice cream two different ways; a cone with a swirl on the top and in tubs. There was a steady increase in franchises leading up to World War II and at the outbreak of the war, they had 10. During the war, Dairy Queen struggled to stay open because some supplies were hard to come by, but business boomed again in the Post-War era. By 1950, there were over a thousand stores. Today there are close to 6,400 franchises.

1. KFC

KFC

One of the most famous franchise founders of all time is Harland Sanders, better known as Colonel Sanders. Sanders was born September 9, 1890,near Henryville, Indiana. He started cooking at the age of six after his father died. His mother had to go to work, so Sanders did the cooking for his younger brother and sister. By the time he was 12, he dropped out of school and got a job on a farm that also gave him room and board. That was the start of a life of different jobs like streetcar conductor, insurance salesman and railroad firefighter. He was fired from dozens of jobs during this time.

At the age of 40, in 1930, Sanders was running a service station in Corbin, Kentucky and his family lived in the back. There he would cook for his family and to make a little extra money, he would sell meals to hungry travelers. Soon, his chicken became so popular that he got rid of the gas pumps and opened a restaurant that would seat 140 people. However, there was a problem because he couldn’t cook chicken fast enough. To fix the problem, he altered a pressure cooker and made it into a flash fryer, which was revolutionary in the fast food industry.

Using the flash fryer, the restaurant became popular and this was when Sanders was given the honorary title of Colonel by a Kentucky senator. Things really took off when famed food writing pioneer Duncan Hines visited the restaurant and wrote a glowing review. But by 1952, Sanders closed his original restaurant. He was a roadside attraction and new junctions and highways made his restaurant too far out of the way.

Knowing he had a winning product, Sanders taught the frying process and the recipe to his good friend Pete Harman in Salt Lake City with the deal that he would get paid a few cents for every piece of chicken that he sold. Harman’s restaurant was instantly successful and soon other people were contacting Sanders about serving his chicken. He made deals with other restaurants and they would pay him four cents for every piece of chicken they sold. To expand his franchise further, at the age of 66, Sanders set out on the road with some flash flyers and a sack of spices to find failing diners and convince them he could turn their business around.

Sanders was tremendously successful as a franchise salesman and on January 6, 1964, Sanders sold the rights to his stores for $2 million and a $40,000-per-year salary, which was later increased to $75,000. He turned down tens of thousands of dollars in stocks. Sanders died on December 16, 1980 at the age of 90. As of 2015, there are close to 19,000 KFC franchises worldwide, and Sanders’ chicken is the most famous fried chicken in the world.

Food Franchise Origins

– WIF Fast Food

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