Engineering Value: From Engineering To Burger King And Beyond

Just a couple of years ago Tom McDonald was a Burger King franchisee worried about the brand's need to keep up with the times. But he felt like no one was listening to his concerns. Then in 2010, global investment firm 3G Capital acquired the brand and the new management was interested in what he and others had to say.

McDonald had been a franchisee since 1986 and was among a select group of executives, franchisees, and suppliers assembled to evaluate every facet of Burger King's fare, which ultimately led to the rollout of a slew of new products in 2012 as part of a multi-faceted strategy to reimage the chain.

"I have always been an advocate of giving good value," says McDonald, who operates 35 restaurants, and recently completed a six-year stint on the national Burger King Marketing Advisory Council. "The problem was that Burger King didn't have a high value perception. The new management has done a good job and is working hard to improve the value."

So what is a refinery process design engineer who spent 20 years globe-trotting the world with Exxon Research and Engineering, doing in Las Vegas touting the merits of adding crispy chicken strips, snack wraps, smoothies, and specialty coffee to his fast food menu?

As it's turned out, the qualities that made the highly organized Midwesterner successful at Exxon, such as his ability to think logically and prioritize (among others), would serve him well when oil industry changes prompted him to seek a career path that would allow him to be his own boss.

In July 1986, McDonald piled his family into an Audi station wagon for a cross-country adventure to Las Vegas--just as the building boom there was beginning. A high school buddy needed an operating partner to expand Burger King into Sin City, and the timing was perfect. Smart enough to know he was more suited to be a developer than an operator, McDonald's first hire was restaurant manager Tom Pike, who remains with the company today as director of operations.

"Never in my wildest dreams did I ever think that I would live in Las Vegas or be a Burger King franchisee," says McDonald, who holds a master's degree in chemical engineering from Stanford University.

These days, his Las Vegas-based Glencoe Management company boasts a diversified portfolio that also includes 9 Panera Bread restaurants in Northern Orange County and 3 Fazoli's locations. Most recently, he added T-Mobile Premium Retail dealership outlets (not franchised), including an 11-store acquisition from a Southern California operator in November.

When T-Mobile first approached McDonald about diversifying into telecommunications, he was unsure about the proposition--until he soon discovered that when it comes to phones, "Everyone loves to upgrade." The retail stores, run by his son and son-in-law, have brought a new element to the company business, with a lower cost of entry and shorter-term leases.

Today, "You have to be more nimble, quicker on your feet," says McDonald, who is conservative when it comes to borrowing money and leveraging his business, and flexible in operating plans. This is just the latest revelation for McDonald, who learned early on (when the Jack in the Box E. coli outbreak changed Americans' attitude about fast food) that he "shouldn't have all my eggs in one basket."

What hasn't changed through the years is his loyalty to those who "do what they say they are going to do." McDonald grew up in a farming community in Illinois where, he says, your handshake is your word, and he still lives by that today. "Everybody who works for me knows that if you say you are going to do something, you have to do everything you can to do it," he says. "And if you can't do it, you have to tell the person you made a commitment to, 'I can't do this and here is why.'"

At 66, McDonald is an adventurous, family man who loves to hunt, hike, golf, and scuba dive. Eventually, he says, he will work less and turn over more of the day-to-day responsibilities to family members. But don't look for him to slow down any time soon.

Looking ahead, he plans to continue to grow his portfolio as part of an "If you are not growing, you are shrinking" operating strategy that must provide value (and, of course, be logical) to work.

"The future is hard to predict right now. I hope America continues to be a good place for entrepreneurs," he says. "I think we have established that we have the ability to grow from a base. Nice, steady growth in these current tough economic times is the wisest philosophy."

Name: Thomas (Tom) M. McDonald
Title: Franchisee/owner
Company: Glencoe Management, Inc.
No. of units by brand: 35 Burger Kings, 18 T-Mobile Premium Retail outlets, 8 Panera Breads, and 3 Fazoli's
Age: 66
Family: Married with three children and six grandchildren
Years in franchising: 26
Years in current position: 26