The Humble Beginnings for 7 Famous Retailers

Many corporate giants like Starbucks, McDonald's, and Costco got their start with humble (and sometimes unprofitable) single locations.
Old McDonald's

While it's possible today to start big, big, big with a bankroll of private financing, that's not exactly how many of America's iconic brands got off the ground. In an overwhelming number of cases — and with the seven examples below — humble origins preceded the evolution into something huge.

So the next time you grab a frozen beverage, dive into a triple-decker burger, or quiz your cashier about their loud shirt with the flamingos on it, take pause to consider the myriad ways these name brand retailers sprouted from no-name status.

7-Eleven: It Hatched From Eggs

Where would microwave burritos and 198-ounce Big Gulps be without 7-Eleven? (OK, so 198 ounces is a slight exaggeration.) Immortalized in song by the likes of Bruce Springsteen, 7-Eleven traces its roots back to 1927, when an employee of the Southland Ice Company in Dallas started selling milk, bread, and eggs from an improvised storefront. Joe Thompson, Southland's manager, bought the ice company and expanded on the idea. His family controlled the Southland Corporation until the late 1990s, when a Japanese company saved it from bankruptcy.

Today, a new 7‑Eleven store opens about every three and a half hours, and the chain boasts a global reach of more than 51,200 stores, according to a company website. So go get a burrito and Slurpee, chow down, and we'll tell you where the newest franchise just set up shop.

McDonald's: Trillions Served

While many people have heard the story of how an enterprising milkshake machine salesman named Ray Kroc started the McDonald's franchise system, what's lesser known is the debate over the burger megalith's roots. The first McDonald's franchise opened in Des Plaines, Illinois just outside Chicago in 1955; a reconstruction of that store sits just a few yards away from the original location. But when Kroc bought the franchise rights from the McDonald brothers, their first store in San Beranardino, California had been up and running since 1940. It has quite a history, too, as it was located on U.S. Route 66.

Both the Mother Road and the Mother McDonald's in California are history, but the company lives on through 35,000 locations worldwide. About the only place without one is Antarctica, but McHerring sandwiches for penguins are reportedly on the way.

Dairy Queen: Swirling to the Top

What is it with suburban Chicago and worldwide chains? Dairy Queen's first store opened up in Joliet, Illinois in 1940, the Dairy Queen website recounts. Growth skyrocketed from 10 stores in 1947 to 1,446 in 1950. Dilly Bars debuted 5 years later, and in 1985, more than 175 million blended Blizzards were sold in the product's first year. Along the way, Dennis the Menace has served as the chain's mascot, and a billionaire found the place irresistible. American Dairy Queen Corporation today is a subsidiary of Berkshire Hathaway. Warren Buffett certainly doesn't need the money, though a lifetime supply of Blizzards has to be a sound investment.

Subway: Rapid Transit to Success

Subway is such a dominant sandwich chain that it's trumped competitors in the market, including Quiznos. As for how things got on a roll (with or without those cheese triangles), Subway once had a much longer name: Pete's Super Submarines in Bridgeport, Connecticut. It opened in 1965 and sold more than 300 sandwiches the first day of business. But it took until 1974 for the first franchise store to open up in Wallingford, Connecticut, according to Subway's website.

In 1980, stores began to use the familiar New York City transit system décor, and by 1987 Subway hit 1,000 stores. For the next two years, the chain added 1,000 more stores. Jared Fogle first appeared in Subway ads after a Men's Health article reported his weight loss, and from the chain is now 35,000 shops huge. But the first all-vegetarian Subway didn't open until 2012, in India. Can a vegan Subway be far behind?

Trader Joe's: Supermarket SoCal Style

The same decade and geography that gave us the Beach Boys also spawned Trader Joe's, where the checkout aisles are named after local streets and employees are encouraged to wear loud surf shirts and/or offbeat headgear. The name dates to 1967, though the actual forerunner was a 1950s convenience chain called Pronto Markets. The first Trader Joe's opened in Pasadena, California, and it's still there. The chain was still trying to find itself in the 1970s (it even sold panty hose), but hit its stride to the point where it's up to 400 shops.

Sadly, you'll find nary a mention of founder Joe Coulombe on the official store website. His company was bought in 1979 by a German family trust, and since then the company has been super secretive — rarely if ever granting press interviews — though it has maintained its fabulously friendly, funky atmosphere.

Peet's: Created by a Coffee Connoisseur

Starbucks may be the most ubiquitous coffee chain in the country, but among coffee snobs, Peet's maintains the highest quality threshold for a national presence. In fact, Starbucks executives trained at the chain, which started in Berkeley, California on April 1, 1966. But it was no April Fool's for Alfred Peet, a native of Holland who lamented the substandard coffee Americans drank. Part educator, part emancipator, Peet used small batches of fresh beans to create a following of groupies who called themselves "Peetnicks."

Remarkably, some Peet's owners once controlled Starbucks before selling it in 1987, and there were rumors Starbucks would in turn buy Peet's back in 2012. Instead, a German conglomerate bought it for almost $1 billion. Seems those Germans have an eye for spotting hot American chains.

Costco: Clear for Takeoff

From crates of coffee to keep you up to carry-out caskets to put you down, Costco sells it all. And remarkably, the ancestor of Costco (called Price Club) set up shop in a converted airplane hangar located in San Diego, California. The year was 1976 and the company almost crash landed, losing $750,000 its first year. But by 1979, Price Club turned a profit, and in 1983, the first Costco as we know it opened in Seattle. The twin chains maintained separate identities for some time, but today it's all known as Costco.

The company has stores in Puerto Rico and Australia and rakes in more than $1 billion in annual revenue. Yet Costco's dedication to keeping costs low runs all the way up to its media relations; the company bypasses fancy publicists and PR firms and handles press itself, with many inquiries fielded personally by Rich Galanti, Costco's executive vice president and chief financial officer.

While we should never forget mom and pop stores, the chains we shop and eat at have become an indelible part of our commercial landscape. They've also knit themselves into the fabric of our popular culture. How many McDonald's jingles can you hum in your head? How many times have you hit a 7-Eleven for a quick pickup? Whether you're a warehouse shopper or a coffee quaffer, the theme is much the same: Small, risky, and often unprecedented ideas, can turn into worldwide forces on the strength of quality, vision, and an undaunted will to succeed. Hey, it's the American way.

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Lou Carlozo
DealNews Contributing Writer

Lou Carlozo is a DealNews contributing writer. He covers personal finance for Reuters Wealth. Prior to that he was the Managing Editor of, and a veteran columnist at the Chicago Tribune.
DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).


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The Costco info is wrong. Costco did buy Price Club which was based in San Diego (and first opened at the north end of Morena Blvd next to the I-5 if I remember my SD days right) but actual Costco was founded and based near Seattle. Most of their generic goods have the name "Kirkland" since that's the city they were founded in, if not currently based there.

Speaking of Seattle and humble beginnings... Nordstroms started as a shoe store in downwtown Seattle.
3 of 7 started in California. Not bad I'd say.