McDonald's Corporation
Restaurants and franchisingFounded 1940- Updated June 2026
Reviewed by Swet Parvadiya
Last reviewed: June 2026
CorpDigest
McDonald's Corporation
Company History
Founded 1940 in Chicago, Illinois
Last reviewed: 2026-06-03 · By Swet Parvadiya
Richard and Maurice McDonald opened their first restaurant in San Bernardino, California, in 1940. For seven years it operated as a conventional drive-in with carhops and a broad menu. In 1948 they shut it down, let the staff go, and reopened with the Speedee Service System: a limited menu, self-service, and assembly-line food preparation. The lines were long from the first week.
Ray Kroc was a 52-year-old milkshake machine salesman when he visited the San Bernardino location in 1954 and saw something no one else had named: a replicable system. He became the McDonald brothers' franchise agent in 1955, opening his own franchise location in Des Plaines, Illinois, on April 15, 1955. The Des Plaines location generated $366.12 in its first day of sales.
Kroc spent the next six years building the franchise network and growing increasingly frustrated with the McDonald brothers' reluctance to standardize aggressively. In 1961, he bought the brothers' company and the rights to the McDonald's name for $2.7 million — one of the most consequential negotiations in American business history. Hamburger University opened that same year to train franchisees and managers in the Speedee Service System's operational standards.
The company listed on the NYSE in 1965. The Big Mac was introduced in 1968. Dynamic Yield, an AI-driven personalization technology company, was acquired in 2019 to power menu personalization at drive-throughs — the same operational logic that Kroc applied in 1948, updated for machine learning and billions of transaction records.
Maurice McDonald co-founded the original McDonald's restaurant with Richard McDonald in 1940 and helped design the operating philosophy that later made the brand expandable. His contribution was rooted in simplification: fewer menu items, more disciplined preparation, and a kitchen organized around repeatable steps rather than improvisation. In 1948, he and Richard rebuilt the business around the Speedee Service System, creating a faster and more predictable way to serve hamburgers, fries, and shakes. Maurice did not become the public face of the national company after Ray Kroc entered the business, but his influence is embedded in the system Kroc franchised. After Kroc bought the company in 1961, Maurice largely stepped away from the brand's national expansion. His lasting legacy is the idea that restaurant growth begins with operational clarity, not menu variety or personality-driven service.
Richard McDonald co-founded McDonald's and played a leading role in the 1948 redesign that turned a local drive-in into the template for modern fast food. He helped develop the Speedee Service System, which reduced the menu, removed carhops, and used assembly-line routines to serve food quickly and consistently. Richard's contribution was partly architectural: he helped think through how the kitchen should be arranged so that work could move in sequence. After Ray Kroc began franchising the concept in 1955, Richard and Maurice remained the originators of the operating model even as Kroc became the expansion figure. In 1961, the brothers sold the company to Kroc for $2 million. Richard's legacy is visible whenever McDonald's prioritizes speed, consistency, menu focus, and process discipline over restaurant theatrics.
Ray Kroc opened his first McDonald's franchise in Des Plaines, Illinois in 1955 and built the franchising organization that made the brand famous far beyond California. He pushed strict operating rules, supplier consistency, operator training, and quality control because he believed customers should receive the same experience regardless of location. Kroc bought the company from Richard and Maurice McDonald in 1961 for $2 million, gaining control of the name and system. As CEO from 1967 to 1973 and a continuing influence afterward, he helped create the expansion culture that defined McDonald's for decades. Kroc's legacy is complicated because he did not invent the original system, but he scaled it with intensity and discipline. His lasting influence is the belief that a restaurant can be managed like a repeatable business format, not merely a place that serves food.
McDonald's acquired Dynamic Yield to enhance digital personalization across drive-thru, kiosk, and ordering experiences. The goal was to use data such as time, weather, menu context, and customer behavior to recommend items and raise average order value. The deal also signaled that McDonald's wanted technology to become a core part of restaurant operations rather than a back-office tool.
McDonald's acquired Apprente to advance voice-based ordering technology for the drive-thru. The startup specialized in conversational AI that could process spoken orders, accents, and menu variations. McDonald's wanted to reduce drive-thru friction and eventually improve labor productivity.
McDonald's acquired Boston Market out of bankruptcy to explore growth beyond its core hamburger platform. The rotisserie-chicken chain offered a different meal occasion and a more dinner-oriented format. Management hoped the asset could broaden McDonald's exposure to adjacent restaurant categories.
McDonald's acquired Donatos Pizza as part of a late-1990s push into adjacent restaurant concepts. The company was looking for new growth beyond burgers and believed pizza could offer an expandable category with strong consumer demand. Donatos also gave McDonald's exposure to a different kitchen format and franchise opportunity.
McDonald's invested in Chipotle Mexican Grill when the burrito chain was still small, eventually becoming its majority owner. The purpose was to participate in fast-casual growth and learn from a concept centered on customization, fresher positioning, and a different service line from traditional fast food.
Richard and Maurice McDonald opened their first restaurant in San Bernardino, California in 1940 as a conventional drive-in. In 1948 they shut it down and reopened with the Speedee Service System: a limited 15-cent hamburger menu, self-service counters, and assembly-line food preparation. Ray Kroc, a 52-year-old milkshake machine salesman, visited in 1954, recognized the scalability, and became their franchise agent. He opened his own McDonald's in Des Plaines, Illinois on April 15, 1955. In 1961 Kroc purchased the brothers' rights for $2.7 million, gaining full control of the name and system. Harry Sonneborn developed the real estate model that funded expansion: McDonald's would own or lease land and sublet to franchisees, making it a real estate company that sold hamburgers. By 1963 McDonald's was selling over one million hamburgers per day. The 1968 addition of the Big Mac — developed by Pittsburgh franchisee Jim Delligatti — became the chain's signature product. By 1984, the year Kroc died, there were over 8,000 locations globally.
McDonald's entered the early 2000s in serious trouble. The company had diversified into Boston Market (acquired 2000 for $173.5 million), Donatos Pizza (1999), and Chipotle (held since 1998), and core restaurant performance had deteriorated. In January 2003, the company reported its first-ever quarterly loss. Jim Cantalupo returned as CEO and introduced the Plan to Win strategy in 2003, organized around five Ps: People, Products, Place, Price, and Promotion. The approach prioritized improving existing restaurants over opening new ones, remodeling stores, simplifying menus, and restoring operating discipline. McDonald's sold Donatos back to its founder in 2003 and fully divested Chipotle by 2006, also selling Boston Market in 2007. Jim Skinner, who became CEO in 2004, backed this focused approach through his tenure to 2012. Revenue recovered from the 2003 trough: by 2012 it had reached approximately $27 billion. The Plan to Win became the template that defined McDonald's operational philosophy for the following decade.
Steve Easterbrook became CEO in March 2015 and made refranchising the defining financial strategy of his tenure. At that point roughly 80% of McDonald's restaurants were franchised; Easterbrook targeted 95%. By the end of 2018, franchised restaurants accounted for approximately 93% of the global system. This shift changed the parent company's economics dramatically: instead of owning restaurant assets, McDonald's collected franchise fees and rent, producing higher margins on a smaller revenue base. FY2019 revenue was $21.1 billion versus $27.4 billion in FY2015, but operating margins rose sharply because low-margin company-owned restaurant revenue was replaced by high-margin franchise income. Easterbrook also accelerated restaurant remodels (Experience of the Future kiosks and digital menu boards), launched all-day breakfast in 2015, partnered with UberEats for delivery, and acquired Dynamic Yield in 2019 for $300 million to enable personalized drive-thru menus. His tenure ended in November 2019 after a consensual relationship with an employee violated company policy.
Most franchise models of the 1950s had the franchisor simply collect licensing fees from franchisees who owned their own real estate. Harry Sonneborn, McDonald's first financial officer, designed a fundamentally different structure. McDonald's Corporation would identify and secure land and building leases, then sublease those properties to franchisees at a markup. This meant McDonald's controlled the real estate even when it didn't own it, giving the company leverage over franchisee compliance and a revenue stream that wasn't tied to food-sales volatility. Sonneborn reportedly told Kroc: 'We are not in the food business. We are in the real estate business.' By 1960 McDonald's owned the land under most of its restaurants. This model created a durable financial moat: as land values appreciated, McDonald's balance sheet strengthened, and franchisees who depended on their lease relationship had strong incentives to follow system standards. Today McDonald's still derives significant revenue from rents, a direct descendant of Sonneborn's 1955 innovation.
McDonald's FY2020 revenue fell to $19.2 billion from $21.1 billion in 2019, a decline primarily driven by dining room closures globally. However, the company's asset-light franchise structure provided significant insulation. Since McDonald's earns rents and royalties from franchisees rather than operating restaurants directly, the revenue impact was far smaller than it would have been for a company-owned chain. Drive-thru — already present at roughly 95% of U.S. locations — became a critical channel when indoor dining was prohibited. McDonald's had been investing in drive-thru efficiency for years; COVID-19 made that investment essential. Delivery through third-party platforms accelerated dramatically. CEO Chris Kempczinski, who took over in November 2019 just before the pandemic began, centered his Accelerating the Arches strategy on three Ds: Digital, Delivery, and Drive-thru. FY2021 revenue recovered to $23.2 billion. The pandemic reinforced that McDonald's convenience infrastructure, not its food alone, is its primary competitive asset.