Glen W. Bell, Jr., the founder of the Taco Bell restaurant chain, recently passed away (see The New York Times). After taking Taco Bell public, Mr. Bell sold it to Pepsico for $125 million. At that time, the chain had 868 restaurants. Today there are more than 5,000 Taco Bell stores operating worldwide. All toll these restaurants sell two billion tacos and a billion burritos per year.
Mr. Bell started out in the restaurant business as the owner/operator of a hamburger/hot dog stand in San Bernardino, CA. That’s where he first began selling tacos. One of Mr. Bell’s nearby competitors in the hamburger business was the original hamburger stand opened by the McDonald brothers.
What did Mr. Bell and the McDonald brothers have in common other than being in the restaurant business? There were of Scottish ancestry. I have found that Scottish Americans tend to be frugal and are highly concentrated in the self employed category. Note that these factors are high correlates of wealth. If you run a business and want to build wealth, it helps to be frugal in operating both your business enterprise and your household.
Bell began selling tacos “for just 19 cents” (cheap even then). The McDonald brothers’ venture succeeded when they began selling 15 cent hamburgers in a market area where 30 cent hamburgers were the norm (John F. Love, McDonalds Behind the Arches). Both operators offered bare bones yet very efficient service. And their respective “good food, fast, for a low price” strategy paid off. They became millionaires- of the Scottish American variety.
Peter Lynch, Fidelity’s Magellan Mutual Fund manager for 13 years, often praised Taco Bell and its founder. Mr. Lynch bought Taco Bell stock for his Magellan Fund (the no. 1 ranked general equity fund during his tenure) before most stock pickers were even aware that it existed. He realized early that as a start up company Taco Bell was profitable. But he was equally impressed with the spartan environment of its headquarters which, according to Mr. Lynch, “resembled a neighborhood garage.” At the time, it was located behind a bowling alley. Plus, Mr. Bell’s office contained “previously owned” office fixtures and a well worn linoleum floor. Mr. Bell invested his company’s resources to enhance Taco Bell’s growth, not his office decor (from: Peter Lynch, Beating the Street and One Up on Wall Street).
Those of Scottish ancestry whether male or female are significantly more likely than the norm to be millionaires. In The Millionaire Next Door, it was reported that those with Scottish ancestry ranked 2nd in concentration of millionaires (92% who were men) of more than 80 ancestry groups. The national survey detailed in Millionaire Women Next Door found that the Scottish ancestry group ranked 1st in concenetration of millionaire women who own businesses.
In contrast, where do Scottish Americans rank in the proportion who live in homes valued at $1 million or more? They rank 36th. Only about 3.1% of those (75%) who are home owners live in $1 million plus homes. Compare this percentage with those of other ancestry groups such as South Africans-26.5%; Taiwanese-10.5%; Russians-9.0%; Asian-Indians-6.6%, and Koreans-5.3& (from Stop Acting Rich, pp. 56-58).
It is very difficult to build a business and achieve without being frugal, and the Scots are known for their frugal ways. After all, they gave us plaid! It never goes out of style, and it does not show stains and dirt like other designs. Beyond these folk themes, those of Scottish ancestry tend to spend less and save and invest more than the norm. Scottish millionaires are among the most frugal of the frugal, and they have passed on their philosophy of thrift as well as self-reliance and independent thought to generation after generation.
(Please note that I am not of Scottish ancestry, but was lucky enough to marry some who is!)