McDonald’s figured out how to keep its business in Russia

Izvestia, citing sources in the food market, reported that the American restaurant chain McDonald’s may return to work under a new brand in Russia.

According to the publication, the company has not yet made a final decision to return to the Russian market. However, one of Izvestia’s interlocutors said it’s “time to decide” on this issue. By March 2022, the network consisted of about 850 organizations in Russia. Of these, 132 are owned by three major franchisees: Razvitie Rost, GiD and Regional Network of Catering Enterprises (LLC SPP). The total revenue of the company in Russia in 2020, including three franchises, amounted to 114.05 billion rubles.

“The company plans to recover funds already invested in the Russian Federation, which went to the development of a restaurant chain. Therefore, it makes sense that the company is now looking for a way to do this, ”says the interlocutor of the publication.

Igor Bukharov, President of the Restaurant and Hoteliers Federation, believes that McDonald’s will be profitable even under a different brand, because the company has already created a network of customer attractions.

According to him, McDonald’s franchise partners will be able to count on a reduction in the amount of payment to use the name of a new foreign company.

McDonald’s is gone, but not all

The company suspended its activities in Russia on March 14. McDonald’s attributed its decision to “operational, technical and logistical challenges” that made it impossible to “guarantee business continuity, maintenance of the core product range, high quality standards”.

The fast food chain stopped working in Russia, but some spots did not close. He began to find business cafes going on across the country. The company noted that this was due to the gradual cessation of production processes.

However, even after two months, franchise cafes remain open. Basically they are in the south of Russia, in the Urals and in Siberia. For example, McDonald’s continued its work in the Novosibirsk, Tomsk, Kemerovo regions, Altai Republic, Altai and Krasnoyarsk regions. Moscow and St. As for Petersburg, there cafes are mostly open at airports. Also, the restaurant operates at the Leningradsky train station in Moscow.

On March 10, the mayor of the capital, Sergei Sobyanin, said that domestic food networks could replace about 250 McDonald’s restaurants that closed in Moscow in a year.

company losses

According to Reuters, McDonald’s lost from the closure of 847 restaurants in Russia $50 million per month. Within a year, the company’s losses could exceed half a billion dollars.

The lost profit is just one of the loss lines. The company continues to pay staff, rent and related expenses. McDonald’s in Russia has about 62,000 employees; they get about 2/3 of the salary during the idle time.

On March 13, a video and photo of queues at the chain’s Russian restaurants appeared in the media. After the company announced its withdrawal from the country, Russians began selling items and products from the company’s restaurants. In particular, announcements were posted on the Avito portal, the cost of products was estimated in tens of thousands of rubles.

Previously, OBI continued to work in Russia, and the Ministry of Industry and Trade announced the intentions of IKEA and Inditex to return to the Russian market after logistical problems and the supply of a number of goods were resolved.

Izvestia reported that McDonald’s is considering returning to the Russian market under a new brand. It was noted that the decision has not yet been made, but the company wants to “recover funds invested in the Russian Federation.” Reuters previously wrote that the one-month suspension of work cost McDonald’s $50 million. At the same time, franchise organizations continue to operate in Russia. Most of them are in the Siberian regions, in the Urals and in the south of the country.

Source: Gazeta


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