McDonald’s and other American brands’ exit spell new economic landscape for Russia
It may resemble McDonald’s in appearance and scent, but it is now Vkusno & tochka. The golden arches are no longer there, and the Filet-O-Fish has been reduced to a fish burger. The Big Mac is no longer available in Russia.
On Sunday, a new era for Russia’s fast-food and economic landscape began when McDonald’s (MCD.N) stores in Moscow reopened under new Russian ownership and a new brand, which translates to “Tasty and that’s it.”
The unveiling of the rebranded outlets, more than three decades after the American burger giant first opened its doors in Moscow in a symbolic thaw between East and West, is once again a stark sign of a new world order. The reopenings took place on Russia Day, a holiday celebrating national pride.
The fortunes of the chain, which McDonald’s sold when it exited the country over the conflict in Ukraine, could provide a test of how successfully Russia’s economy can become more self-sufficient and withstand Western sanctions.
On Sunday, scores of people queued outside what was formerly McDonald’s flagship restaurant in Pushkin Square, central Moscow. The outlet sported a new logo – a stylised burger with two fries – plus a slogan: “The name changes, love stays”.
The queue was significantly smaller than the thousands of people who flocked to the original McDonald’s opening there in 1990 during the post-Soviet era.
“We need to avoid a drop in quality, so that everything stays as it was before, because we loved McDonald’s,” said IT worker Sardana Donskaya, who queued up 32 years ago for a first taste of a brand that had epitomised Western capitalism and returned on Sunday to usher in its successor.
Vkusno & tochka’s menu was smaller and did not offer the Big Mac and some other burgers and desserts, such as the McFlurry. A double cheeseburger was going for 129 roubles ($2.31) compared with roughly 160 under McDonald’s and a fish burger for 169 roubles, compared with about 190 previously.
The composition of burgers has not changed and the equipment from McDonald’s has remained, said Alexander Merkulov, quality manager at the new company.
The McDonald’s Exit
McDonald’s closed its Russian restaurants in March and said in mid-May that it had decided to leave the country altogether, one of the most high-profile business departures since Russia sent tens of thousands of troops into Ukraine on Feb. 24.
In a sign of the haste the new owners have had to rebrand in time for the launch, much of the packaging for fries and burgers was plain white, as were drink cups, while takeaway bags were plain brown. The old McDonald’s logo on packets of ketchup and other sauces were covered over with makeshift black markings.
Sergei, a 15-year-old customer, saw little difference though.
“The taste has stayed the same,” he said as he tucked into a chicken burger and fries. “The cola is different, but there really is no change to the burger.”
The flagship Moscow restaurant is among 15 rebranded outlets opening in and around the capital on Sunday. Oleg Paroev, CEO of Vkusno & tochka, said the company planned to reopen 200 restaurants in Russia by the end of June and all 850 by the end of the summer. See FACTBOX:
“For three months we did not work,” said Ruzanna, manager of a Moscow branch due to open in July. “Everyone is very pleased.”
The chain will keep its old McDonald’s interior but will expunge any references to its former name, said Paroev, who was appointed McDonald’s Russia CEO weeks before the Ukraine conflict began.
“Our goal is that our guests do not notice a difference either in quality or ambience,” Paroev told a news conference in the restaurant.
Siberian businessman Alexander Govor, the new owner of the business, told Reuters that it would look to launch something similar to McDonald’s signature Big Mac.
“We don’t have the right to use some colours, we don’t have the right to use the golden arches, we don’t have the right to use any mention of McDonald’s,” he told Reuters.
“The Big Mac is the story of McDonald’s. We will definitely do something similar,” he said. “We will try to do something even better so that our visitors and guests like this dish.”
CEO Paroev added the company was looking for new suppliers of soft drinks as it runs down some stocks of Coca Cola (KO.N), which is suspending its sales in Russia. Paroev said all but 2% of the chain’s ingredients are sourced within Russia.
Not everyone was impressed.
Moments after the news conference, a man stood up in front of the cameras holding a sign that read “Bring back the Big Mac”. He was swiftly escorted out by restaurant staff.
New Owner Said Paid ‘Symbolic Sum’
Govor is one of many Russians snapping up assets as hundreds of Western firms flee. He said on Sunday that he paid a “symbolic” figure “far lower than market price” for McDonald’s Russia. McDonald’s, the world’s largest burger chain, took a charge of up to $1.4 billion following the sale.
Russian authorities have said the U.S. group has the right to buy back its restaurants within 15 years – though Govor poured cold water on that possibility.
“They made it clear to me that they would not buy back,” Interfax quoted him as saying.
McDonald’s, which has said that Govor will retain the chain’s tens of thousands of employees for at least two years, was not immediately available to comment further about the terms of the sale or its future Russian intentions. – Reuters