It was back in 1954 that two guys by the name of James McLamore and David Edgerton decided to give the hamburg business a try. They opened their first restaurant in Miami, Florida, and called it Burger King. Business was not that great, but they hung in there. Today, Burger King Corporation and its franchises operate more than 9,700 restaurants in all 50 states and 56 countries around the world, with plans to open 500 additional Burger King restaurants in Europe in the next 20 years. Burger King employs 300,000 employees worldwide. Annually, 693 million hamburgers are sold at Burger King restaurants worldwide. Over 4.6 million WHOPPER sandwiches are sold each day at Burger King restaurants around the world -more than 1.6 billion each year. In 1985, average restaurant sales passed the $1 million mark. In fiscal year 1997, Burger King had worldwide sales of $9.8 billion. But, there was a beginning. David Edgerton spoke with me about the early days of Burger King and what it took to build an international empire.
Q – You actually worked for the Howard Johnson Corporation in Miami when you were starting out, didn’t you?
A – Oh, yeah.
Q – What did you do for Howard Johnson?
A -Well, they hired me as an Assistant Manager in Winter Park. They had a big store with chefs that cooked dinners. It was quite a store. Then they moved me to their downtown store in Miami, and I was the manager there. Eighty-five bucks a week. Before that, I had been in several different restaurants. I had a pie business once. I grew up in the hotel resort business. But, that’s where I met Jim. I originally was gonna build a Dairy Queen with food. They never had one and I got permission. I built it in Jacksonville. A Dairy Queen with hamburgs. But, after I saw that equipment from California and all the lies they told me about how great it was, I sold the Dairy Queen business before I even got it finished, and went to Miami. I was told it would be the greatest place to open up the first (hamburg place). Back then, they were fifteen-cent burgers and shakes. We didn’t have a name.
Q – You opened your first Insta Burger King in Miami on March 1st, 1954.
A – Yeah. We didn’t call it that. We had just bought those machines, from the Insta Co. in California. But, there was no name. It just said fifteen-cent burgers and shakes. That’s all it said. It was an ugly green building. After the machines collapsed, they didn’t work at all. I designed my own broiler; I was kind of mechanical, and my own shake machine. Then we looked around for all kinds of names. Burger King I didn’t like because it’s kind of generic, but that’s all we could copyright.
Q – And you actually designed that Burger King logo, didn’t you?
A. Yup. The King, the lettering and all that stuff.
Q – Was that something that came easy to you or did you have to labor over it?
A. You mess with it you know. I’d done that before with my business, The Pie Man in Chicago. I knew a little bit about how to do that. I went to a guy in Chicago who wrote a book on the psychology of colors. He told me that probably red and yellow would be the best food colors. That’s why I ended up with those. (Laughs). And, I thought they were better looking than green.
Q – You didn’t have the money to construct the first Burger King building yourself.
A. Oh, no.
Q – But you were able to convince the owner of the property to build it?
A. Yeah.
Q – And lease it back to you?
A. Yeah.
Q – How did you convince him to do that?
A. Well, you know, I think he just felt sorry for me. Really. The man was a great philanthropist. His name was Jack Shear. He made himself a millionaire many times over. I went in to his office and I guess I just looked like a simple, stupid guy. He had this property out in front of a big trailer park he owned. It was the road to the airport. The first 3 months it rained. It never stopped – 90 days straight. It was a horrible thing. That little man used to come in there and buy bags of burgers and things. One day one of my help saw him going over to the garbage can on the way out and he dumped the whole thing in there. He just wanted to give me the business. Isn’t that wild?
Q – I wish he had given the burgers away to someone or some charitable organization rather than dump them in the garbage.
A. Well, yeah, but in those days that would’ve been hard to do. He did support all that kind of thing. He had a chauffeur-driven car and he couldn’t very well go looking around. But, the man just took pity on me. Because of him, his friends who were all wealthy local businessmen here in Miami also built me the next 3 stores. I’d go in and drop the magic words and say Jacob Shear built… and they’d say, ‘Jacob built it for you’?’ That’s how much they thought of him. A great guy.
Q – So, the restaurant was not an immediate success.
A. No, it was horrible.
Q – Did you ever think of giving up?
A. I was too dumb and then I was desperate. I started the second store, if you can believe it, with no money, thinking it would always get better, because of those tremendous sales at McDonalds. They had opened one store about the same time I did in Chicago. He did $350,000 the first year Des Plaines. I think I did $70,000, to show you the difference. Of course we realized that Miami was one of the worst areas we could have opened. The high family income was all up north. Our stores up north instantly did much better. What happened is, you’re very naive at that age. Nothing can phase you. I think I was 20. I got to know Jim McLamore and I couldn’t afford the second store. I mean it was underway, but I couldn’t afford to finish it. So, I conned him into going in with me. That’s how that happened. He was ready to do something and it looked like an exciting business – those machines and all that. Of course neither one of us knew how bad they were.
Q – Jim McLamore said of you, “Dave Edgerton was a guy who never focused very much on the details, particularly those concerning financial matters.”
A. That’s right.
Q – “Accounting, financial issues and money matters simply didn’t interest him.” In the bottom line of today’s business world, would Dave Edgerton have succeeded?
A. No. Since that time I’ve been involved in many different things, Chart House, Papa John’s and every one of those companies, those guys are entrepreneurs and creative people. Like Ray Kroc (McDonalds), he didn’t like details, financial details. I knew Ray. So, he got Sonneborn in there. That’s what they’ve all done. Jim just never did a thing with the operations. He had nothing to do with the store designs or the operations, and thank goodness. . We got along famously. I used to come up with these things and say, ‘Jim, can we do this?’ and he’d analyze it and see. The first commissary for instance. He asked me how much it would cost and then I’d try to go out and get all the numbers for him and he’d make it happen. If Jim had gotten involved in food products and I had gotten involved in finance, we’d never have gotten anywhere. I spent all my time on the road. Jim had kids, so he stayed here and did the leg work. And when we first started we’d go to the mortgage houses together. As it got big and started to develop, we had to split that up, and it worked out great. I took care of the commissaries and the manufacturing. We had our own manufacturing company. I set that up. There again, after I designed the broiler and had it made, I said, ‘Jim, we could make our own broilers’ and he looked at me kind of sideways, and he’d say, ‘Give me the numbers.’ So, I’d go out and learn the numbers. Then, he managed to get it going. So, we opened a manufacturing plant. All these things started small. But, we ended up with nine commissaries in the United States and of course all this was to the benefit of the licensees. The minute Pillsbury bought us; they closed down all that stuff. (Laughs).
Q – Jim McLamore’s son said of his father, “His word was his bond and that’s just the way we did business in the beginning.”
A. Oh, yeah.
Q – You guys weren’t big on contracts then?
A. We tried not to. Again, you’re relating it to today. We were naive young people. We believed everybody was as honest and naive as we were. We were very lucky. We could’ve gotten taken, and we did occasionally. But, we never ran into the boiler plate that you’re referring to until we got up to New York, New Jersey, New England. Then all of a sudden the leases were 300 pages long. It was kind of funny because I remember walking out on deals where the lawyers for the licensees just got overbearing. That’s a trick Jim and I used to do, we kept our plane at the airport waiting and when the guy would get overbearing with all that bologna, we’d just pick up and walk out, and leave town. It settled a lot of nonsense.
Q – Did you have any idea that Burger King would catch on like it did?
A. No. My idea originally is, I thought if 1 had 5 stores I could just live off of that and be King of the World, down there in Miami.
Q – You would be the Burger King.
A. Yeah. We sold our best store because we were desperately going broke. We were totally wiped out. I built that broiler and this fella Frank Thomas heard about it and asked me if he could manufacture it. I built the shake machine. I went to Indianapolis to his plant. General Equipment was a big company, fairly big. He was mad at McDonald’s ‘cause they used a Taylor machine. So, he started Burger Chef and asked me to help him start it. That was part of the deal. So, I helped him open the first Burger Chef, and let him use my machines in it. Then he would manufacture the machines for me and give me that forty-five percent distributorship discount, and that’s how Jim and I were able to equip, at that time we had 5 stores, with new equipment. We couldn’t have possibly bought it. In other words he could put the machines in there at no cost. That really saved us, ‘cause that machine enabled us to make the WHOPPER.
Q – How did you know that Burger King would work outside of the Miami area? What went into the decision to build a Burger King at one location over another? You’re living in Miami. How do you know where to build a Burger King in Syracuse?
A. Well, of course you develop a technique as time goes by. You develop a program. Back then the government gave you census areas and you had to interpolate them on a map as to family incomes. It boiled down to 5 or 6 prime location factors, which are pretty obvious. Traffic would be one. And, of course family income became more important than individual income, although they kind of went together. And, the industry and business that’s near you, for your lunches. If you didn’t have that, you couldn’t do it. You go into an area; it didn’t take you long. After a few years, I could drive into a city and locate 10, 15, 20 sites. I did L.A. for instance. It took me about a week. I had about 104 possible locations. Then you go after ‘em. That’s a big city. But, I did the same thing in London. Years later, Ray Kroc said he hired a private driver I had and took him around to every one of my locations. Pillsbury said they didn’t want to spend the money and so McDonald’s beat us to the punch over there. Syracuse, I wouldn’t know a thing about. But, I’d get up there, and you’d know the main roads and drive.
Q – What did you charge franchisees to come on board in the early days?
A. Well, the original franchise we sold, and like I said it was the only really good store we had, of course we didn’t tell him that, we charged him $25,000 for that store.
Q – What year was that?
A. Oh, my, it must’ve been around ‘60.
Q – What would it cost a franchisee today’?
A. Oh, my goodness, and that was a going store, not including the building and land. You paid a landlord rent for that, including the equipment. Today, just the equipment and franchise would be around $375,000 – $400,000, plus your pre-opening costs. And then you’ve got to have money to carry it. I don’t think you could approach it for much less than $500,000 cash.
Q – So, you have to be rich, to get even richer.
A. Yeah, and they’ve all gotten that way, because of properties. Now, McDonald’s went public early, and with the public money they bought land and built buildings and charged their licensees eight – eight and a half percent rent. We tried to get ‘em a low rent through landlords of six, six and a half per cent. But, McDonald’s was smart in that it gave them the where-with-all to buy locations, and we had to waste time negotiating. For years we would look at McDonald’s figures. It would say Burger Kings are averaging a million. McDonald’s are averaging a million and a half. It really is the buck, man. ‘Til all of a sudden I realized they were throwing their foreign stores in there. Our foreign stores, dollar wise, do 2-3 times what those stores do, because we charge so much more over there. Food is much more expensive. We’re getting $4.00-$5.00 for a WHOPPER in Denmark and England. McDonald’s was doing that and throwing that in. They had a preponderance of stores. When you got into the United States, they weren’t any higher than we were. But, it might’ve been what drove me a little harder. (Laughs).
Q – Jim said that in the 50’s and 60’s fast food business and chain restaurant operations were virtually unknown and you guys were pioneers. Would you agree with that’?
A. Oh, sure. There were things like Big Boy. That was a chain. The other reason they were unknown was because it was kind of a local thing. The TV wasn’t around. Nobody advertised nationally on radio Bob’s Big Boys, but they were a chain. So was the White Castle. A friend of mine owned the White Towers in New York. He had about 180 stores. But, we didn’t know them as chains. They weren’t publicized that way. TV is really, I guess, what made everybody cognizant of what that fast food business was.
Q – As hard as it was to get Burger King off the ground back in 1954, do you think it would be more difficult today?
A. Yeah, I do. These environmental things, the cost of impact fees are horrible today. If you built a store, you could pay $100,000 just for an impact fee, ‘cause you’re gonna use the roads. In fact, I’ve paid that. It’s a lot more costly today.
Q – You didn’t want to sell out to Pillsbury, did you?
A. No. Jim thought that he was sick. He wasn’t, but he thought he was. He had some examinations and thought he might have cancer.
Q – What did you want to see happen with the company at that point?
A. See, I’d been approached by a couple of different people. In the meantime, Jim had been playing golf with the Chairman of Pillsbury and he though he was a nice guy. In the meantime I had been approached by the Chairman of General Foods. They really wanted to buy us. He wanted to know if he could bid against it, and we’d have gotten more money for it. But, Jim didn’t want to talk to him. So, we didn’t do it. I didn’t want to sell. I wanted to go public. Another thing that happened to us is we had a meeting with Jack Carnes who was the CEO of Beatrice Foods. His deal was, he would pay us for the business, almost as much as Pillsbury as it turned out. Then, we’d still own half of it, and stay there and run that thing. He had done that with several businesses. Taylor Freezer was one of ‘em. Boy, they came out smelling like a rose. Now, you had all this cash to grow. When we sold to Pillsbury we needed $50 million dollars to proceed with the development schedule that we embarked on. And Pillsbury pulled the plug. They were a bunch of conservative old ladies. Here we were forty-five percent of their profit, and they didn’t want to put any money into it. So McDonald’s just leaped ahead of us.
Q – Was it difficult for you to give up your input into Burger King when you did?
A.Yup. One of the things that Jim talked to me about before he passed away, and we had some great talks, was that he didn’t feel like the young men that we had brought up with us, or he and I, had the capability of running a company as big as it could be. Which is wrong. They’ve had 15 presidents since Pillsbury bought it. It turns out they were all incompetent. We could’ve done a great job. But, we were young. I was 34, 35. Jim was a couple of years older. He hung on there a little while longer, mainly to play golf with the Board of Pillsbury. He didn’t do anything. The people they brought in were just awful. I said I can’t put up with this nonsense. I was so used to controlling it. I’m talking about at the commissary level, the store level, manufacturing. We even had our own construction company. So, most of my guys quit. I finally just said the hell with this, and left.
Q – When was the last time you ate at Burger King?
A. Well, as a matter of fact, I ate there this morning.
©Gary James
