Coca-Cola, McDonald's maintain strong partnership since its first handshake agreement in 1955
May 19, 2014
(The New York Times Co.)
– It was early 1955 when Ray Kroc, an ambitious milkshake equipment salesman who had bought the right to expand McDonald’s throughout the country, was opening his first restaurant, in Des Plaines, Ill.
In search of a beverage supplier, Mr. Kroc called Coca-Cola to ask about selling its sodas and reached an executive named Waddy Pratt, who ran Coke’s fountain division.
“On a Saturday morning sometime after that, Waddy goes to Des Plaines to check out this guy who claims his restaurant is going to take America by storm,” said Dick Starmann, a confidant of Mr. Kroc’s, recalling a story both men had told him many times. “He pulls up to a red-and-white-tiled shop on Lee Avenue with a yellow neon sign over it, where a guy with a hose was washing down the parking lot.”
Mr. Pratt was looking for Ray Kroc, “and the guy says, ‘You’re talking to him,’ ” Mr. Starmann said in an interview.
A few hours later, Mr. Pratt and Mr. Kroc shook hands. To this day, executives from both companies say, that handshake seals the primary relationship between Coke and the giant fast-food chain.
“Those two companies helped each other grow and expand around the globe,” Mr. Starmann said. “Neither one would be what they are today without the other.”
McDonald’s is Coke’s largest restaurant customer, and the two companies maintain a unique, symbiotic relationship.
As McDonald’s expanded globally, it often used Coca-Cola’s offices as a base of operations to get up and running. In 1993, Coke executives suggested that McDonald’s bundle its soda with a burger and fries during the “Jurassic Park” promotion, creating the Extra Value Meal. And recently, Coke helped McDonald’s develop its new line of smoothies.
Over the years, the companies created a system for the delivery and production of Coke’s sodas at McDonald’s restaurants. At other restaurants, Coke syrup is delivered in plastic bags. But for McDonald’s, Coke delivers its syrup in stainless steel tanks that ensure its freshness, creating what many believe is the best Coca-Cola available.
Coke sales teams are prohibited from selling syrup to other restaurants for less than what McDonald’s pays, even if that means losing business to Pepsi-Cola. The companies declined to comment on their relationship.
“When you’d ask Coca-Cola in what countries it had the biggest sales, it would say something like the United States, Japan, Germany and McDonald’s — and in that order,” Mr. Starmann said. “It was kind of funny but it was true.”
McDonald’s is so important to Coke that it is the only customer with its own division. Coca-Cola’s McDonald’s division is run by Javier C. Goizueta, the son of Coke’s former chief executive, Roberto C. Goizueta. When the elder Mr. Goizueta died in 1997, flags at McDonald’s throughout the world flew at half-staff.
Stephanie Strom contributed reporting.