Because of the Happy Meal McDonalds is the world’s largest toy distributor. Larger than Hasbro or Mattel. This is an Empire!

Dave Young:

Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

[Out Of This World Plumbing Ad]

Dave Young:

Welcome back to The Empire Builders Podcast. Dave Young here, along with Stephen Semple, and I was ranting and raving about a new book I’m fascinated with and crazed about. And Stephen hit the record button and decided we were going to talk about Happy Meals instead of that. So here we are. Happy Meals, huh?

Stephen Semple:

Happy Meals, yeah.

Dave Young:

The McDonald Happy Meal. The precursor to the Playland. I’ve always enjoyed going through the McDonald’s drive-through and ordering a happy meal, whether I had a kid in the car or not.

Stephen Semple:

I could see you doing that.

Dave Young:

And then sometimes they look and go, “Well, where’s the kid?” I’m like, “Hey, mind your own business about the kid.”

Stephen Semple:

They’re in the trunk.

Dave Young:

There’s a kid somewhere. Give me my damn toy.

Stephen Semple:

I was going to ask, what’s your favorite part? Is it the toy?

Dave Young:

Absolutely. You can get a nugget, a few of them.

Stephen Semple:

Well, here’s the crazy thing is it is the most sold meal in history. There’s been like 35 billion happy meals sold.

Dave Young:

Is it, really? That’s a lot of happy.

Stephen Semple:

Yeah. Yeah. Yeah.

Dave Young:

Sure.

Stephen Semple:

And it actually makes McDonald’s one of the largest toy distributors in the world. They’ve given away billions of toys.

Dave Young:

Oh, sure they did.

Stephen Semple:

More toys than Hasbro or Mattel.

Dave Young:

And just controversy like when they were giving away Beanie Baby toys. Good Lord, people were losing their minds.

Stephen Semple:

Yeah. Yeah.

Dave Young:

I’m trying to think of who this is. It might be our mutual friend, Gordon. Somebody in our circle tells a story about their dad driving the family through McDonald’s when they were kids and everybody getting really excited because like, “I’m going to get a Happy Meal.” And their dad orders one cup of coffee and just keeps going. I’m like, “Oh, man, that would suck.”

Stephen Semple:

That would be a very unhappy car.

Dave Young:

So when did the Happy Meal start?

Stephen Semple:

There’s a bit of a debate about who actually created the Happy Meal. So we’re going to explore a couple of the different stories, but it was basically 1974.

Dave Young:

Okay. Yeah.

Stephen Semple:

One of the stories is it was created in Guatemala by Dona Yoly and her husband who opened the first franchise in that country.

Dave Young:

Wow.

Stephen Semple:

And Dona wanted her restaurant to feel like a family restaurant. Look, she understood things had to be done the McDonald’s way-

Dave Young:

Sure.

Stephen Semple:

… to the corporate standards because McDonald’s even has a Hamburger University-

Dave Young:

Oh, yeah. Yeah.

Stephen Semple:

… which was a brainchild of Fred Turner, and it’s a training program for franchisees. We could even do a thing on Hamburger University because it was the first of its type. It was the first training program of its type for franchisees. So there’s always this thing that McDonald’s is trying to set where there’s this goal of a consistent experience, but they also want to give franchisees some freedom because what they have found is that franchisees often come up with some really great ideas, and when there’s a great idea, they want them to take initiative on it.

Dave Young:

Yeah. I mean, I’ve heard of… the McFish sandwich wasn’t always on the menu and things like that. So this fits the bill.

Stephen Semple:

Yeah. Yeah. So there’s always this funny line.

Dave Young:

Yeah.

Stephen Semple:

Yeah, there’s always this funny line where we want consistency, but we want franchisees to take initiative. Back to Dona Yoly, she’s sitting in her restaurant and she’s watching families. And one of the things she notices is this family of four comes in, the dad orders first, then the mom, then the kids. And during this whole process, it’s even hard to keep the kids entertained. They’re having a hard time deciding what they want to have, and then they make their way to the booth and the two-year-old stops eating. Then the four-year-old stops because they’re full. And Dona looks around, she sees the same thing, food left on trays.

Dave Young:

Yes.

Stephen Semple:

This is not great for kids. The meals are too large.

Dave Young:

They need a smaller portion. Yeah.

Stephen Semple:

Yeah. And look, Dona could be happy because after all, she sold all this food, but she knows parents are not happy because the meals are not being finished.

Dave Young:

And nobody to buy one meal and cut it in half and give it up-

Stephen Semple:

Yeah, and do all of that. So she starts off with this whole idea of creating a kid’s menu, their size and the things they like, and do it as a combo because not only does it create a meal size for the kids, it also makes the ordering easier because it’s this combo. And then, she decides to add a toy to each order as well.

Dave Young:

See, this is the special part.

Stephen Semple:

Yeah, and calls it the Ronald Menu. So it’s better for the kids, better for the family. Sales are exploding and it’s noticed by corporate.

Dave Young:

Okay.

Stephen Semple:

So a group from McDonald’s corporate flies down to see her, and she’s also then invited to present the concept at an annual event in the United States. And McDonald’s takes this idea, trials in a couple of markets, rolls it across the United States, and of course the rest is history. But that’s not the only origin story.

Dave Young:

Okay.

Stephen Semple:

There’s also an origin story about Bob Bernstein who’s an ad guy who’s been working with McDonald’s for decades and has been specifically creating promo stuff for kids. And at this time, the under-twelve group, McDonald’s is losing share to Burger King. Kids like Burger King better. And one day he’s sitting at breakfast watching his son having breakfast and his son’s having cereal, and his son Steve is reading the cereal box, the same one as yesterday. And Dave, we’ve all experienced that as kids, right?

Dave Young:

Gosh, yeah. Yeah, absolutely. And you fight over it with your siblings.

Stephen Semple:

Yeah. Bob asks his son, Steve, why are you doing that? And Steve’s like, “I don’t know, it’s just something to do.” And a light bulb goes on for Bob. It’s like, “Kids want to be entertained while they eat.” So he came up with this idea of creating a package for the food with games and entertainment. So Bernstein spends a couple of years working on the packaging. He actually hires a children’s designer. They make this little box with handles, they put cartoons and games and puzzles, and now he needs a name for it.

Dave Young:

Okay.

Stephen Semple:

And he goes back to a jingle McDonald’s had used about McDonald’s being a happy place. They had at one point this jingle called This Is a Happy Place. And so, he decides to call it Happy Meal.

Dave Young:

Happy Meal. Yeah.

Stephen Semple:

Happy Meal. And they run a test in three markets. And again, the rest is history. Now Bob’s claim is disputed in a Newsweek article that he did not create the idea, that he got directions from corporate because of Dona Yoly, but Bob says he did it on his own.

Dave Young:

Okay.

Stephen Semple:

The trials do well, McDonald’s rolls it out nationwide, but there’s a third claim.

Dave Young:

Oh, gosh. Now what’s at stake here? Just bragging rights.

Stephen Semple:

Just bragging rights really at the end of the day.

Dave Young:

Yeah, okay. Yeah.

Stephen Semple:

But there’s an interesting twist here at the end.

Dave Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

[Empire Builders Ad]

Dave Young:

Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.

Stephen Semple:

But there’s a third claim.

Dave Young:

Oh, gosh. Now what’s at stake here, just bragging rights?

Stephen Semple:

Just bragging rights really at the end of the day.

Dave Young:

Yeah, okay. Yeah.

Stephen Semple:

But there’s an interesting twist here at the end. The third claim is that Dick Brahms is who was involved because there was a restaurant called Burger Chef, which predated McDonald’s. And it did a version of a Happy Meal called Fun Meal that came with toys. And that Dick Brahms noticed what Burger Chef was doing, and Dick told Bob to develop the idea.

Dave Young:

Oh, okay.

Stephen Semple:

Now, in 2009, there’s a touring exhibit of McDonald’s history that said Brahms was the inventor. But in 1982, the company gave Yolanda a silver Ronald McDonald statue for developing the Happy Meal and credited her with the idea. But then in 1987, Bernstein received a bronze Happy Meal for bringing the Happy Meal to fruition. And then in 1988 when Dick Brahms dies, he’s called the Father of the Happy Meal. And then there’s the McDonald’s, Behind the Arches, documentary that says Bob is the creator of the Happy Meal.

Dave Young:

Okay. Wow. Is our goal here to break the tie? Because I’m wondering, did someone get a gold prize because we had a bronze… I mean, a silver.

Stephen Semple:

No one got a gold prize. But one thing that is nice, FYI, Yolanda became the president of McDonald’s Guatemala. So she did well inside the McDonald’s corporation. And interestingly, when they first rolled the Happy Meal out, it almost died. The toys were kind of terrible. There was like a grimace-shaped eraser. There was a easel, there was dice. It was also hard for the franchisees because it was a drag on efficiency because they had to figure out how to assemble all of these meals.

Dave Young:

Oh, sure.

Stephen Semple:

And the real breakout moment happened in 1979 when Star Trek comes out and they do a cross promotion with the film.

Dave Young:

There you go.

Stephen Semple:

So it was a real toy upgrade and it exploded.

Dave Young:

Yeah.

Stephen Semple:

And that’s also what made McDonald’s realize these cross promotions will be a really great thing to do.

Dave Young:

And the rest is history, right?

Stephen Semple:

Yeah.

Dave Young:

Yeah.

Stephen Semple:

Because the other thing is, especially with the cross promotions, there’d be several different toys. And what do kids want to get?

Dave Young:

They want to collect them all.

Stephen Semple:

All the toys. Yes.

Dave Young:

Yeah, or there’d be a girl’s toy and a boy’s toy.

Stephen Semple:

Yeah.

Dave Young:

Yeah, so wow.

Stephen Semple:

So they did it with Hot Wheels and the year they did it with Hot Wheels, it was like 44 million Hot Wheels Distributed, which was a third of Hot Wheels’ world sales that year. Then they did stuff with Disney and it’s crazy, right?

Dave Young:

Yeah. So if I’m casting the tiebreaker, I’m going with Yolanda.

Stephen Semple:

I figured you would. And why is that?

Dave Young:

Just because I can see corporate America stealing it from a Guatemalan woman in the seventies or eighties.

Stephen Semple:

Right.

Dave Young:

Yeah. “We can’t let it be her idea. Bob, get in here.” I don’t know. I love the idea that she did it for the right reason, right?

Stephen Semple:

Correct.

Dave Young:

And it’s certainly not the first restaurant that had a child’s menu.

Stephen Semple:

Correct. Correct.

Dave Young:

That’s been going on for a long time. But to say, “No, we need something special for these kids,” I think that’s cool.

Stephen Semple:

Well, and here’s what I liked about it, whether it was-

Dave Young:

I hope she had better toys than a Grimace eraser too.

Stephen Semple:

Yeah. Yeah. Probably. Now whether it was her or whether it was Bob, the two things I liked about those two origin stories is they both involved observation of children. So in her case, it was observation of the family in terms of, “Boy, we’ve got a couple of problems. The meal’s too big, the kids are bored. It’s too hard for them to order. Let’s create a combo. Let’s put a toy in.”

Dave Young:

Yeah.

Stephen Semple:

I love that observation. But I also love Bob’s observation of looking at his son, Steve, sitting reading the cereal box again and suddenly realizing, “Well, wait a minute, maybe what we need to do is create a packaging that has got cartoons and puzzles and things like that on it for the kids to read while they’re doing this.”

Dave Young:

I love the fact that they both came from observing children, but there’s also this notion of spontaneity or concurrent ideations where it’s just an idea as time has come and multiple people see it and act on it. And there you go.

Stephen Semple:

Yeah. Yeah.

Dave Young:

So it’s definitely a part of that. And I think it’s nice that they recognized everybody a little bit at one point.

Stephen Semple:

Yeah.

Dave Young:

Not altogether at the same time, but…

Stephen Semple:

Yeah, and it could be something like that. And it could even be they were developing their ideas on their own. And then when it got implemented, they kind of got blended. Because I bet you if we really look back, Bob spent most of his time working on the packaging, the handles being arches, the little box, the stuff on the box. He may not have even thought of the whole idea of it being a combo and a toy inside. Yolanda may not have thought about, “Well, what to do with the box?” She may have been like, “Hey, let’s do this combo platter. Let’s do this combo thing with the toy inside.” And I would not be surprised if all of a sudden McDonald’s saw these two things come along and “Wait, these are both great ideas. Let’s merge them together.”

Dave Young:

Yeah. Yeah, absolutely. Absolutely. I think that happens.

Stephen Semple:

Wouldn’t surprise me. Yeah.

Dave Young:

I keep thinking about what was my favorite toy that I ever stole from my kids out of their Happy Meals?

Stephen Semple:

I’m guessing it was not the compass.

Dave Young:

No. But man, there were some cool toys. My kids would get them, and I’d wish, “God, I wish they’d had these when I was a kid.” By the time the Happy Meal came to any McDonald’s near me when I was a child, I was probably too big to get a Happy Meal.

Stephen Semple:

Although you tell me you still ordered them at the drive-thru though.

Dave Young:

Oh, I’ve ordered many at the drive-thru, but not as a child. The town I grew up in didn’t have a McDonald’s.

Stephen Semple:

Wow, you grew up and really… Did it have a Dairy Queen?

Dave Young:

Sure. It had a Dairy Queen, it had an [inaudible 00:16:21]-

Stephen Semple:

So at least it had a Dairy Queen.

Dave Young:

But McDonald’s was always a special treat because we didn’t get one unless we were on a trip somewhere.

Stephen Semple:

Wow.

Dave Young:

We’d be driving to the Front Range of Colorado to visit my aunt, or just somewhere. I think the closest one was a hundred miles away.

Stephen Semple:

That’s wild.

Dave Young:

So of course, we’d be begging the whole way.

Stephen Semple:

Yeah, for McDonald’s.

Dave Young:

And it wasn’t my dad that ordered a coffee. He didn’t-

Stephen Semple:

Just to be clear. So here’s the interesting thing is the part that I find so fascinating about the Happy Meal was it was a changing of nothing. It wasn’t that they suddenly developed different food to serve.

Dave Young:

Yeah.

Stephen Semple:

It was, “Let’s put these things together as a combo.” Because remember, it took a long time until adult combos happened.

Dave Young:

Yeah.

Stephen Semple:

It was years. So, “Let’s put together a combo to reduce friction.” We’re always talking about reducing friction, makes it easier for the kids to order. “Let’s put it in a box now.” Now, it’s fun. “Let’s put puzzles on the box.” They’re being entertained. “Let’s put a toy in it.” So it was really additions to what it was that they were already doing, and all of a sudden it had this humongous success.

Dave Young:

Yeah. Well, and I mean, honestly, if you’ve ever driven children around in a minivan, much better to hand them a box with some food in it that they can eat out of the box-

Stephen Semple:

Yes.

Dave Young:

… than to hand them a wrapped up hamburger and some french fries in a little sleeve.

Stephen Semple:

Yeah.

Dave Young:

Yeah. So kudos to McDonald’s for helping with that.

Stephen Semple:

And it hit on many levels.

Dave Young:

We used to turn our dog loose in the van to clean up the fries.

Stephen Semple:

To clean things up. So a big hit. And the other part that I also liked was that at the end of the day, Yolanda, she did well inside of McDonald’s, went on to become the president of Guatemala.

Dave Young:

Yeah.

Stephen Semple:

So she definitely got recognition for what she did. And it is also interesting that McDonald’s, because they’ve done it with other things as you were pointing out, has managed to skate this line of “Yes, we want to have consistency, but we also want to allow our franchisees to do a little bit of innovation and watch for that innovation.” And that’s a hard line to skate, so well done on their part.

Dave Young:

Well done. And what a great story to bring at The Empire Builders. Yolanda and Bob and who’s the other guy?

Stephen Semple:

It was Dick, Bob, and Yolanda. That’s it.

Dave Young:

Dick. We’re not in the business of giving these people awards, but I think these are three people that had a hand in making the world a little bit better place.

Stephen Semple:

A little bit happier.

Dave Young:

Just a little bit, a little bit happier. Billions of toys for lots of kids and me, and thank you.

Stephen Semple:

There you go.

Dave Young:

Thank you for that.

Stephen Semple:

You’re welcome, Dave. It’s all about you.

Dave Young:

That’s right. At the end of the day, Stephen, it’s all about me. And that’s true of everybody. Thanks a lot.

Stephen Semple:

Well, on that note, thanks, David.

Speaker 1: Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire building session, you can do it at empirebuildingprogram.com.