Reuters -- McDonald's Rules Russian Fast Food Market
November 4, 2001
McDonald's Rules Russian Fast Food Market
By REUTERS
Filed at 6:51 a.m. ET
MOSCOW (Reuters) - When American fast
food giant McDonald's (news/quote) opened
its first Moscow outlet during the final days of
the Soviet Union in 1990, thousands of
Muscovites waited hours in the bitter January
cold to grab a bite of the West.
Eleven years and 66 million Big Macs later, the
prospect of a burger and fries no longer
attracts mile-long queues, but the Golden Arches still rules supreme in Russia's
cutthroat fast food market.
McDonald's boasts 71 stores in 22 Russian cities, including the original Moscow
outlet in Pushkin Square, which is still among the busiest McDonald's restaurants
in the world.
``We don't have any serious competitors who can influence our business. Every
year we have more and more visitors,'' Khamzat Khasbulatov, president of
McDonald's Russia, proudly told reporters during a recent visit to one of its
Russian suppliers.
The first powerful Western investor in Russia, McDonald's has weathered
political turmoil, government coups and an economic crisis -- and still turns out a
handsome profit.
``I can say that we expect to produce 50,000 tons of food in 2001, which
represents an increase of 25 to 30 percent on last year,'' Khasbulatov said.
McDonald's rivals cannot boast similar fortunes.
Russkoe Bistro opened in 1995, with the brief of selling cheap and cheerful
traditional Russian fare. Dozens of restaurants sprouted in prize Moscow
locations, boasting an array of meat- and cabbage-filled pastries, sweetmeats and
kvass, an alcoholic drink made from fermented brown bread.
Despite the blessing of the Moscow authorities, who took a 44 percent interest in
the venture, the chain began operating in the red after the 1998 financial crisis
and is now set to be bought up by Moscow catering heavyweight Rosinter.
BURGER BATTLES
Taking the golden arches to the Soviet Union was the brainchild of McDonald's
Canadian chief, George Cohon, who took a Soviet Olympic delegation to a
McDonald's restaurant during the 1976 Montreal Olympic games.
The delegation was impressed, and the 14-year-long negotiations to bring burgers
and fries to the heart of Soviet Russia began.
Negotiations to make McDonald's the official food of the 1980 Moscow
Olympics, however, were a spectacular failure.
But that small setback is now a mere footnote to Russian burger history.
McDonald's can expect its rosy fortunes to continue rising in the long term,
Khasbulatov says.
``In Russia, only 15 percent of the population regularly dine out. That means we
have great potential for the growth in the near future,'' he said.
``We have huge plans for our development in Russia. Next year McDonald's is
going to open 25 new restaurants across Russia, an investment of around $40
million,'' he said.
The improved economic climate in Russia has also been a boon to Khasbulatov's
venture.
Russia's rehabilitated agriculture sector is now able to supply McDonald's needs
locally -- enabling the company to close the farms it opened in 1990 in an
exceptional move to guarantee quality.
``Our business is restaurants and we didn't want to step into another market, but
we had to. Fortunately, now we have good partners who are reliable and whom
we can trust,'' Khasbulatov said.
McDonald's initially produced 50 percent of its ingredients itself, a figure which
is now down to 25 percent and still decreasing.
``Our main goal is to develop local suppliers. We check their production every
three months to guarantee quality,'' Khasbulatov said.
The burger chain has become so much a part of the Russian scene that even
Boris Yeltsin, the former Russian president, was not shy to tuck into a Big Mac.
Cohon, who recently wrote a book entitled 'To Russia With Fries,' says Yeltsin,
well known for his love of food and drink, once complained to reporters that the
hamburgers lacked salt.
The complaint apparently did McDonald's no harm because Yeltsin's wife Naina
bitterly retorted: ``It doesn't matter what I cook for that man -- there's never
enough salt.''
Copyright 2001 Reuters Ltd. |
