MIKE LUNA & McDONALD’S: GET IN EARLY AND STAY FOCUSED ON THE CUSTOMER

Mike Luna got his start with McDonald’s flipping burgers at the tender age of 16 in 1960 at the 164th McDonalds store in Galesburg, IL. Today, Mr. Luna is the franchisee/owner of two highly successful local McDonald’s locations; one in Monmouth and one in Aledo, IL. It was clear early on in his presentation to the Midwest Entrepreneurs class last night that Mr. Luna is not your average McDonalds store owner.

Starting with McDonald’s in 1960—just five years after founder Ray Kroc had opened the first McDonald’s in Des Plaines, IL—gives Mr. Luna a unique perspective on the company. He fondly recounted his memory of meeting Mr. Kroc during a trip to McDonald’s headquarters in 1972. He remembers to this day the highly personal manner in which Kroc spoke to him while there. It may be hard to fathom today, but McDonald’s was at that time still in the fairly early stage of its life cycle; and still exhibiting remnants of Kroc’s original entrepreneurial vision. Mike said he could tell at the time that Kroc, like all the entrepreneurs we have had speak in class so far, had an “agenda in his mind” for company success that he knew would work.

Yes, McDonald’s is today a massive global corporation. According to the firm’s webpage, it now consists of “more than 33,000 restaurants serving nearly 68 million people in more than 119 countries every day.” But Mike Luna’s experience with the company reminds us that it did grow from one store in Des Plaines in 1955 to 164 stores in 1960 to what it is today by chance. It was clear in Mr. Luna’s presentation last night that what makes his local stores successful today is what has made the entire McDonald’s chain successful over the course of the last 50-some years; a keen and unrelenting focus on the customer. He talked about trying to spend as much time as possible “on the floor” of his restaurants so that he can talk to and get to know customers. In fact, discussing some of his recent car-buying experiences, he suggested that he might well be spending more time “following up” with his customers than marketers of far higher cost products that typically require high levels of company-buyer interaction to sell. Mr. Luna also discussed several instances of what might be best called “competitive intelligence gathering” wherein he has personally visited other fast food restaurants to learn how to better serve his customers (based both on what competitors do better and do not do as well as McDonald’s). All of this seems to strongly support and reflect, here at the local level, the McDonald’s corporate mission statement “… to be our customers’ favorite place and way to eat… We are committed to continuously improving our operations and enhancing our customers’ experience.”

Finally, one thing quite different about Mr. Luna when compared to our previous guest speakers so far this semester is that Mr. Luna is a franchisee (i.e., someone who pays the parent corporation a series of fees for the right to operate the store as the local owner who then must run the store in accordance with contractual guidelines set forth by McDonald’s). McDonald’s, like most other large restaurant chains, employs franchising as its primary means of territorial expansion. Some may question whether or not a franchisee is a “true” entrepreneur. The best response to such a question is probably “yes, but with key unique characteristics.” As Mr. Luna explained to the class last night, the fees he pays to McDonald’s—roughly 18 cents out of every dollar he takes in in sales—go to help support his operation and make his McDonald’s store successful. Specifically, in return for the fees, franchisees get a wealth of marketing and operational advice and support from McDonald’s (based on the firm’s intimate knowledge of how to most efficiently and effectively run a fast food restaurant). So, compared to non-franchisee entrepreneurs—someone going it completely on their own—franchisees like Mike Luna face a somewhat reduced level of risk in the marketplace. However, he is free to make many pricing and other important decisions locally. Ultimately, as with all entrepreneurs, long-term success rests squarely on the franchisee’s own shoulders. While the fee-supported advice and support and the contractual rules are there to guide one toward success, what gets done locally of one’s own volition is what makes or breaks the individual McDonald’s franchised store.

Mike Luna got in very early—at a low level—on a very good thing. He knows McDonald’s like few people do. A key ingredient in the recipe for success for both McDonald’s—first regionally and now globally—and Mike Luna—locally still—is knowing and catering to the customer. It was a great pleasure to have Mike speak in class last night.

Regards,

Prof. Gabel

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About Terrance Gabel

Terrance G. Gabel is currently an Associate Professor in the Department of Political Economy and Commerce at Monmouth College. Originally from Keokuk, Iowa, Dr. Gabel earned his BBA (Marketing) from the University of Iowa, his Master of Science degree (Marketing) from Texas A&M University, and his Ph.D. (Marketing) from the University of Memphis. He possesses three years of business-to-business sales experience, one year of executive-level marketing management experience for a heavy industrial international trade services firm, and one year of product management experience for a large banking organization. He was also a freelance business writer and consultant for approximately three years.

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