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Russia proves magnetic for western fast food chains

Posted by John Bonar on 16.08.2010 10:44 | Published in Статьи

Russian consumers with open wallets are the magnet pulling multinational fast food chains to Russia. Wendy’s/Arby’s Group is the latest such chain to embrace the rubel-spending power of a growing Russian middle class. They have plans to open up to 180 restaurants in the next 10 years through a deal with Wenrus Restaurant Group, a subsidiary set up by Food Service Capital which operates the popular Goodman's Steak House chain among other brands. Yum Brands Inc has agreed to buy out Russian partner Rostik Group from the 161-outlet chain Rostik's-KFC, while PepsiCo, McDonald’s and Coca-Cola have all said they planned to keep investing in Russia. 

Baskin-Robbins,a unit of Dunkin' Brands operating 145 outlets in 65 cities, throughout Russia in a franchise operation with a Moscow ice-cream factory is planning to supply its products to Europe following approval from the European Commission.It launched in Russia in 1988. It's sister brand, Dunkin' Donuts, opened its first shop on Moscow's Novy Arbat Street in April this year, now has three, and according to Dunkin' Brands CEO Nigel Travis,will have 10 stores in Russia by the end of the year.Donuts Project LLC, Dunkin’ Donuts’ franchise partner in Russia, concentrating on Moscow and the Moscow region in 2010 but has plans to expand steadily throughout Russia and Ukraine. Konstantin Petrov, founder of Donuts Project LLC, brings years of experience and expertise as a successful businessman within the region’s restaurant and catering industry and has introduced marketing innovations unique to Russia including a customer loyalty programme and doughnut of the week.

Wendy’s/Arby’s Group said it was attracted to Russia because the world's ninth-largest population has relatively few fast-food restaurants.

"This is a key step in the continued acceleration of our international development strategy," said Roland Smith, CEO of Sandy Springs-based Wendy's/Arby's. He called Russia a dynamic market with significant long-term expansion potential where Wendy's/Arby's will open dual branded stores.This is the fourth major international development agreement Wendy's/Arby's has announced since the merger of the burger and roast beef chains in September 2008. It is also the largest to date in terms of number of restaurants. Previous development agreements covered Singapore, the Middle East and North Africa, and Turkey.

McDonald’s,which celebrated its 20th anniversary in Russia this year, is planning to open another 45 restaurants in Russia this year and add drive-through windows to many of its 135 existing outlets.

Vladimir Pantyushin, Russia economist at Barclays Capital, said: “What will determine the continued success of the multinational is the fact that consumers have now put the [financial] crisis behind them and are ready to spend.

“In the US and UK and every western country, there are heavy debt levels and consumers are concerned about cleaning up their balance sheet. This is not the case in Russia. The wallet is pretty much open.”

The only break on expansion is coming at Starbucks, the iconic coffee shop chain, which entered Russia September 2007 with business partner Monaks Trading company, part of the Kuwait-based retailer Alshaya Group, and has postponed its expansion to St. Petersburg by two years.“A Starbucks cafe will not open in St. Petersburg until 2012; we are not disclosing information about the reasons for the delay because of investors’ plans,” said Lia Dovgun, marketing manager of the Monaks Trading company in Moscow.

Starbucks faced intense competition from other coffee shop chains in Moscow and St Petersburg including Costa Coffee chain of the RTS-quoted Rosinter Group. The home grown group was launched in 1990 by Rostislav Ordovsky-Tanayevsky Blanco, a Venezuelan of Russian heritage. Today it operates 356 restaurants in 60 cities across Russia and neighbouring countries and is acknowledged as the region's leading casual dining chain operator.

A McDonald's Moscow restaurant A McDonald's Moscow restaurant