Episode Details
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Chain Restaurants and the Interstate
Description
Welcome to Episode 15 of the Preferred Shares Podcast.
In this episode—another in our series on the beneficiaries of the spending on the interstate highway system of the United States—we take turns discussing Howard Johnson’s, McDonald’s, and KFC.
In this episode
The Johnson’s family cigar business
Howard Johnson quitting school at age 12
Worked at a drug store until buying it out, expanding sales
Johnson’s ice cream becomes hugely popular
Great Depression forces a pivot - franchises
WWII forces more changes
1959 IPO and continued growth
70’s struggles leading to an eventual buyout by Imperial Group PLC in 1979
Imperial eventually sells to Marriott in 1985
The first McDonald’s
Revamps, simplifications, and innovations
Ray Kroc’s entrepreneurial spirit
Kroc drops out of school at age 15
Countless business ideas and odd jobs
The Silent Night club’s simplified menu leaves a lasting impression
Becoming a disposable cup salesman
Cups leading Ray to Prince Castle and the Multimixer
WWII almost killing the mixer industry due to copper constraints
The Multimixer leading Ray to the McDonald brothers
An immediate realization of opportunity
Rapid expansion due to Harry Sonneborn, Franchise Realty Corp, mass marketing of automobiles, post-war suburbanization, the GI Bill, and the continued buildout of the interstate highway system
McDonald’s 1965 IPO and beyond
Harland Sanders tough upbringing in rural Indiana
Leaving home at age 12
A passion for cooking mixed with a a highway service station
Sanders’ special way to make fried chicken
Interstate 75 killing Sanders’ first restaurant
At age 66, Sanders starting over again to by creating franchises in a unique way
The 1964 sale of KFC and then 1969 IPO
Acquired by R.J. Reynolds, then RJR Nabisco, then sold to Pepsi in 1986
KFC spun off in 1997, and KFC China spun off as Yum China in 2016
Our takeaways
ArcGIS Interactive map, Interstate Highway System, McDonalds Locations, Continental United States
KFC, Kuwait City, 1980, Miranda Kopetzky
Colonel Sanders’ business card, late 1940s
Life Magazine , 7/2/1951, Vol 32 no. 1
Episode Resources
Grinding It Out, Ray Kroc, 1977
Roadside Empires, Stan Luxenberg, 1986
McDonald’s Golden Empire, Storymaps, ArcGIS, 2021
The Man Behind McDonald’s, David Holzel, BOSS, Fall/Winter 2016
KFC’s sustainable competitive advantage in the international franchising, Kofi A. Bediako, Journal of Business Cases and Applications, 2018
The First Giant Restaurant Chain: Howard Johnson’s: Rise and Fall, Gary Hoover, American Business History Center, 2021
Howard Johnson’s Superfans Can’t Let Go, Jimmy Vielkind, Wall Street Journal, 2022
America’s Eating Habits: Food Away From Home, USDA, Economic Research Service, 2018