How They Started Page 26

  While Ub produced the drawings, Walt provided the voice of Mickey. A Disney employee at the time described how “Ub designed Mickey’s physical appearance, but Walt gave him his soul.” Walt continued to be the voice of Mickey until 1946.

  Walt partnered with businessman Pat Powers, and with his help Steamboat Willie premiered at the Colony Theater in New York on November 18, 1928, and was a roaring success. Mickey Mouse proved to be a worldwide hit, and Walt released the first two Mickey cartoons after adding a soundtrack.

  Booming cartoons

  The success of Mickey Mouse did not mean easy sailing for the business, however. In 1929, Walt Disney Studios released the Silly Symphonies, a series of comedy animations, each one containing different characters. During this time, Walt was becoming increasingly annoyed by Powers, who he thought was taking too large a cut of the distribution profits. In 1930, he struck a new deal with Columbia Pictures. Disgruntled, Powers persuaded Ub to leave Disney and open his own studio, thus poaching Disney’s chief animator.

  “Ub designed Mickey’s physical appearance, but Walt gave him his soul.”

  Mickey’s popularity rocketed throughout the 1930s, overtaking silent film- era cartoon character Felix the Cat in popularity, but the Silly Symphonies were not as popular as Walt hoped. In 1932, Walt was approached by engineer Herbert Kalmus, who persuaded him to redo one of the Symphonies using new technology that would allow the black-and-white animations to be in full color. Flowers and Trees proved a phenomenal success and won the Academy Award for Best Cartoon in that year. Disney Studios went on to win this category for the rest of the decade.

  From then on, all Silly Symphonies would be produced in color, and the series grew in popularity. The most famous Symphony of all, Three Little Pigs, was released in 1933 and contained the classic song “Who’s Afraid of the Big Bad Wolf?,” which became the anthem of the Great Depression; it ran in theaters for many months.

  Faced with the popularity of a new character, Popeye the Sailor, from a rival studio, Walt turned Mickey colorful in 1935 and soon launched the familiar spin-off characters, Donald Duck, Pluto and Goofy. Never one to rest on his laurels, Walt announced plans to create a feature-length full-color animation of Snow White and the Seven Dwarfs. This would take years of production, and Roy and Walt’s wife Lilly both tried to persuade Walt against it.

  Meanwhile, competitors dubbed the project “Disney’s Folly,” and were sure this would be the end of the Disney success. They were nearly right, as by 1937 the studio had run out of money and had to show a rough version to Bank of America to get a loan to finish the animation.

  Snow White and the Seven Dwarfs premiered at the Carthay Circle Theatre on December 21, 1937, and received a standing ovation from the audience. It went on to become the most successful motion picture of 1938 and earned over $8 million from its original release.

  Where are they now?

  The success of Snow White marked the start of the golden age of Walt Disney Studios. With the profits, Walt was able to build new studios in Burbank, and family favorites such as Pinocchio, Fantasia and Bambi followed in quick succession starting in the early 1940s.

  The onset of World War II saw Disney create training and instructional films for the military. After the war, Disney produced a few mediocre films until the release of Cinderella in 1950 and Peter Pan in 1953. Around this time, Walt came up with the idea of a theme park full of Disney characters, after wishing he had somewhere fun to take his daughters on his day off. Funded by a loan from Bank of America, Disneyland was officially opened on July 17, 1955.

  Walt Disney died in 1966, but Disney continued its global expansion in his absence, with his brother Roy replacing him initially. Shortly before Roy’s death in 1971, the company’s second theme park, Walt Disney World, opened in Orlando, Florida, continuing Disney’s commitment to the new arm of the business.

  The early 1980s proved to be a trying time for the company, however, with declining revenue from films forcing the firm into cost-cutting measures and narrowly resisting a hostile takeover bid from financier Saul Steinberg in 1984. After this, Disney saw an upturn in its fortunes, with the animation studio enjoying a string of critical and commercial successes under the new leadership of Ron W. Miller as CEO and Michael Eisner as chairman.

  The 1990s saw a further expansion of the Disney theme park franchise with the opening of Euro Disney (now Disneyland Paris), MGM Studios in Florida and a new park in California. Miller died in a helicopter crash in 1994, and Eisner was replaced in 2005 by his long-standing assistant Robert Iger.

  Today, The Walt Disney Company is one of the world’s leading entertainment corporations, with an annual revenue of around $40 billion. In recent years, it has completed a number of high-profile acquisitions, including 3-D animation partner Pixar for $7.6 billion in 2006 and comics giant Marvel for $4.24 billion in 2009. The Disney juggernaut shows no signs of slowing, with plans to open a new theme park in Shanghai by 2014. As Walt once promised his father, the name of Walt Disney is forever cemented in history.

  KFC

  Recipe for success

  Founder: Harland Sanders

  Age of founder: 56

  Background: Farmhand, railroad operator, justice of the peace, insurance salesman

  Founded in: 1952

  Headquarters: Louisville, Kentucky

  Business type: Fast-food chicken restaurant and take-out

  When Harland Sanders opened a small roadside restaurant in the 1930s specializing in fried chicken, he could not have predicted the legacy he would create. That one site, in Louisville, Kentucky, has today grown into Kentucky Fried Chicken (more recently renamed KFC), a business with 16,300 company-owned and franchised restaurants in more than 100 countries. The business has expanded from its humble origins into a global superbrand and is as famous now for its chicken as it is for its tagline—“finger-lickin’ good”—and the snow-white bearded image of its founder, more commonly known as Colonel Sanders.

  Home is where the business is

  Harland was born in Indiana in 1890, with a taste for fried chicken honed from an early age. He enjoyed cooking the food his mother had taught him to make, including pan-fried chicken, country ham, fresh vegetables and homemade biscuits.

  But it was some time before he could put these homegrown skills to use. Harland left school at the tender age of 12 and displayed his entrepreneurial bent by trying all kinds of jobs—including stints as a farmhand, railroad worker, insurance salesman and even justice of the peace. He also gained experience by starting two companies: one, a steamboat ferry company that operated on the Ohio River between Jeffersonville, Indiana, and Louisville, Kentucky, and the other, a manufacturing business.

  His real love, however, was for what he knew best: cooking. In 1930, despite the fact that America was in the grip of the Depression, he opened his first restaurant in the front room of a gas station he had acquired in Corbin, Kentucky. It was a modest set-up, consisting of one table and six chairs. The idea came from conversations with his customers: Harland had spotted an opportunity after customers who stopped for gas asked if they could get food nearby. He named the site Sanders Court & Café, and his entrepreneurial skills were put to good use as he juggled several roles, including station operator, chief cook and cashier.

  Word soon spread about his cooking, so much so that in 1935, Kentucky governor Ruby Laffoon made Harland an honorary Kentucky colonel in recognition of his contributions to the state’s cuisine. Customers were soon turning up in droves for the food alone, which prompted Harland to expand to bigger premises across the street, a building that housed a 142-seat restaurant as well as a motel and gas station. He enrolled in an eight-week course in restaurant and hotel management at Cornell University to learn more about the business, and forged ambitious plans to start a restaurant chain by expanding to two additional locations. However, both of the new sites failed soon after opening, so he concentrated on improving the existing business.

&
nbsp; Spice of life

  Some might say that Harland was a late bloomer: it wasn’t until 1940, when he was 50 years old, that he created the recipe for which the business is so famous today. But as he said in his autobiography, Life as I Have Known It Has Been Finger Lickin’ Good (Creation House, 1974), “no hours, nor amount of labor, nor amount of money would deter me from giving the best that was in me.”

  Fried chicken, too, might not have been a new concept, but Harland proved that not all successful ideas need to be new by coming up with his own original recipe of herbs and seasoning. It gave a new twist to fried chicken, one of the nation’s favorite foods. He claimed that the 11 herbs and spices he used “stand on everybody’s shelf,” ensuring the chicken had that home-cooked feel about it. “I hand-mixed the spices in those days like mixing cement,” he once said, “on a specially cleaned concrete floor on my back porch in Corbin.”

  Some might say that Harland was a late bloomer: it wasn’t until 1940, when he was 50 years old, that he created the recipe for which the business is so famous today.

  Not satisfied with perfecting the herbs and spices for fried chicken, Harland decided to experiment with the way it was cooked. He braved the pressure cooker, a new invention at the time, in his quest for the perfect fried chicken. He developed a method of pressure-frying the chicken so that it cooked much faster than when using traditional frying methods in an iron skillet—cutting the cooking time by more than a third. Again, this was in response to his customers’ needs: they weren’t prepared to wait a long time for their food. Testament to his success: in 1939, the motel and restaurant were endorsed by food critic Duncan Hines in Adventures in Good Eating, a guide to America’s finest roadside restaurants. The listing sent the restaurant’s popularity soaring.

  Testing times

  In the years that followed, though, a series of events that were out of his hands forced Harland to radically alter his original business plan. In 1939, a fire destroyed the original building, but Harland rebuilt and reopened the restaurant. The advent of World War II, however, posed an even bigger challenge: gas rationing forced Harland to close the motel. Undaunted, he reopened after the war, and business boomed for many years, as his restaurant and motel were a popular stop for travelers driving along what was then the major north-south route.

  Harland even became an early pioneer of the franchising model. He traveled from town to town cooking batches of his fried chicken for other restaurant owners and employees. Sales were slow, but his dogged perseverance paid off and resulted in his first franchise operation in 1952, when Harland gave Pete Harman of Salt Lake City, Utah, the first KFC franchise. The deal was done the old-fashioned way—a handshake agreement stipulated a payment of 4 cents (about 41 cents today) to Harland for each chicken sold.

  Not all progress had a happy ending, however. Transportation development in the late 1950s proved too big a hurdle for even Harland to overcome and hurt his business in more ways than one. The completion of an interstate highway provided travelers with an alternative north-south route, one that completely bypassed the restaurant. The value of Harland’s site plummeted as customer numbers dwindled, and he was forced to sell the business and try his luck elsewhere. The sale—for $75,000 ($581,000 today), half the asking price of the previous year—was completed on the day he officially “retired” and picked up his first social security check for $105.

  Harland gave Pete Harman of Salt Lake City, Utah, the first KFC franchise. … A handshake agreement stipulated a payment of 4 cents to Harland for each chicken sold.

  After paying off debts, he was virtually penniless, but ever the entrepreneur—even in his 60s—and armed with a strong belief in his fried chicken, Harland adapted his business plan. If customers weren’t able to come to his restaurant and try his recipes, he would have to take the idea to them. It was at this point that the KFC franchise began to gather momentum.

  The road to success

  With the first franchise in Salt Lake City going well, Harland went on the road to sell his recipe to restaurants, but he had to go right back to basics. “Lots of nights I would sleep in the back of my car so I would have enough money to buy cookers the next day if someone took a franchise,” he recalled in his autobiography.

  It was also a case of all hands on deck: Harland’s wife, as he put it, acted as “my packing girl, my warehouse supervisor, my delivery person—you name it. Our garage was the warehouse. She’d fill the day’s orders in little paper sacks with cellophane linings and package them for shipment. Then she had to put them on a midnight train.”

  Harland came up with a package he would sell to restaurants: the recipe (which included the spices), a pressure cooker, take-out cartons and advertising material. He also persuaded existing restaurant owners to add the KFC formula to their menus.

  “Lots of nights I would sleep in the back of my car so I would have enough money to buy cookers the next day if someone took a franchise.”

  The hard work paid off, and the concept known as KFC took shape, quickly becoming a fast-food sensation. By 1963, the recipe was franchised to more than 600 outlets in America and Canada. Harland visited independent restaurants throughout the US, doing a spot of what he called Coloneling—ensuring that customers were happy. It marked a turning point in the business in more ways than one.

  Expansion wasn’t Harland’s sole growth strategy, and he constantly sought to innovate the business. The first food offered “to go” was at a restaurant in Jacksonville, Florida, in 1957, inspired by an idea from Harland’s daughter Margaret. Also in 1957, the chicken was sold in the now-famous buckets for the first time, under the equally well-known slogan “Finger lickin’ good.” In 1960, for the first time, Harland’s vision of bringing the recipe to the people had paid off handsomely. He could now boast 190 franchisees running 600 franchise sites across the US and Canada.

  Going global

  Three years later, in 1963, the business was thriving with 17 employees, but it was getting too big for Harland to handle. In the previous year alone, he had traveled 200,000 miles to drum up new business and cater to existing franchisees, and he was not getting any younger. An attractive offer from an investment group headed by John Brown, Jack Massey and Pete Harman (the first person to buy into the franchise 12 years earlier) proved hard to refuse. Harland agreed to sell for what was then a substantial sum of $2 million ($14 million today) on the condition that he still keep a hand in the business as an ambassador for the company. He was in charge of quality control, and his image was used as the company trademark. Under the terms of the agreement, the investment group bought national and international franchise rights, excluding England, Florida, Utah and Montana. Harland retained ownership of the franchises in Canada.

  The new owners pumped investment funds into the business and the company set its sights on expanding more, both within North America and globally.

  Soon KFC outlets spanned all 50 states, and the business established a foothold in Puerto Rico, Mexico, Japan, Jamaica and the Bahamas. The first European site opened in Preston, England, in 1964. In the mid-1960s, KFC ranked sixth in volume among food-service companies, with 1,500 take-out stands and restaurants. Franchising remained the core of the business’s expansion plans, and the now well-known red-and-white-striped buildings were developed to attract tourists and residents to the brand.

  In 1966, the KFC Advertising Co-op was established, giving franchisees 10 votes and the company three when deciding advertising budgets and campaigns. Franchisees benefited from a share in company equipment and supply sales, and a National Franchisee Advisory Council was also established.

  Franchising remained the core of the business’s expansion plans, and the now well-known red-and-white-striped buildings were developed to attract tourists and residents to the brand.

  Buoyed by the success of the business’s rapid expansion, the company went public, listing on the New York Stock Exchange in 1969, with Harland buying the first 100 shares.

  At
this point the new owners were looking at ways to streamline the business. Plans to reduce overhead—in particular labor costs—were put into action, by transforming Harland’s original idea of a sit-down eatery into a fast-food, stand-up concept, with emphasis on fast service. The business grew at a phenomenal rate, and some franchisees had already become millionaires. But KFC found that such growth was to come at a price. With franchisees making money at such a fast rate, there was very little incentive for them to stay with KFC long-term instead of turning to new ventures (at one point the management team had 21 millionaires reporting to it!). This meant that successful franchisees were only prepared to commit to the business for a year or two, resulting in a lack of strongly established, and experienced, franchisees.

  At the same time, negative reports about the accounting practices of other franchise operations appeared in the media, and as a result—although the reports were not connected to KFC—the company’s share price took a beating, dropping to $10 per share from a high of $55.50 in 1969. It signaled a worrying time for the business, and several key players, including Jack Massey, resigned following a series of disagreements. A new management team with a background in food and finance was swiftly appointed to revive financial fortunes. It signaled the end of the road for Harland’s involvement with the company, and he resigned from the board of directors. At the grand old age of 80, even he knew his limits.

  In an article in the New York Times, he said: “[I] realized that I was someplace I had no place being … Everything that a board of a big corporation does is over my head, and I’m confused by the talk and high finance discussed at these meetings.”

  Changing hands

  As part of the plan to revive KFC, the business merged with food and alcoholic beverage business Heublein Inc. in 1971, when sales stood at $700 million, and John Brown left the business following this deal. It seemed a wise move as Heublein’s expertise was in marketing, an area in which the business received a much-needed boost. Introducing new products such as barbecued ribs was also the order of the day, and although the new lines proved popular, they masked the fact that sales of fried chicken were declining. After a while the sales boost waned, and the business once again began to falter.