Success for exclusive-heir of McDonalds Russia, but big Mac a huge loss

Wednesday, June 22, 2022
author picture Raphael Thomas
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Original content created by news.limited staff

McDonald's Russia Franchisee Wants to Bring Back the Big Mac

Earlier this year‚ a man appeared in Moscow with a sign reading Bring back the Big Mac! before being escorted out of the McDonald's restaurant. Mr. Govor and his team are now trying to convince the rest of the franchisees to join the new company. He plans to reopen as many as 200 outlets in the country within the next two years.

MOSCOW (Reuters). Big Macs or McFlurrys might not be on the menu of the successor McDonalds restaurants in Russia. However‚ the chief executive said that the company has ambitious growth goals after selling almost 120‚000 burgers its first day. McDonald's Corporation has completely exited Russia. In May‚ it sold all its Russian restaurants to a local licencee. Vkusno tochka (or Tasty)‚ 50 Moscow restaurants reopened under new names on June 12‚ and 13. Oleg Paroev‚ Chief Executive‚ is eager to expand locations but acknowledges the challenges of replacing certain ingredients and suppliers as well as dealing avec other McDonalds franchisees that still use McDonalds branding. McDonald's Exit Story demonstrates how hard it can be for Western consumers to abandon Russia after the events in Ukraine. It also shows how difficult it was for operators from other countries to take over popular brands. The new logo and colour scheme were introduced to Vkusno tochkas Moscow Pushkin Square flagship event. Paroev stated that we sold nearly 120‚000 hamburgers the very first day. In all the time that McDonald's Russia has been in business‚ we have not seen such a daily turnover. Paroev doesn't expect this demand to continue‚ but he hopes to surpass the growth targets of Alexander Govor and achieve that goal ahead of time. Govors goal to open 1‚000 McDonalds stores within four- to five years is higher than the 850 that McDonalds has. Paroev stated that hiring is ongoing and that he also plans to increase cooperation with Sberbank. However‚ he has ruled out the possibility of a share in Russia's largest lender. MCDONALDS RETURN? Govor previously owned 25 restaurants and stated at the launch that he had paid symbolic money for McDonalds Russia. The U.S. corporation made it clear that they wouldn't exercise their 15-year buyback option. Paroev expressed his opinion that McDonalds would be able to return to Russia if Vkusno tochka was a franchisee‚ however he stressed that there have been no negotiations to this effect. McDonald's stated in an email that it had completed the Russian sale and has exited this market. FRANCHISE CONUNDRUM Former McDonalds franchisees are keeping the McDonalds branding on their packaging and electronic menus‚ but selling Big Macs with a new name. This is causing headaches for Vkusno Tochka. Paroev stated that they were not pleased about it. He said that while continued McDonald's use is illegal under Russian law‚ it does not mean the company can sue the Russian government for violating Russian law. However‚ they do not have any rights to McDonalds. Rosinter Restaurants (an ex-franchisee) is still in operation at St Petersburg's Pulkovo Airport and train stations. Paroev stated that Vkusno tochka had proposed to ex-franchisees to join the new brand. One has already accepted. Paroev stated that Govor purchased 700 restaurants. This left about 100 unaccounted. Vkusno tochka has no access to the old suppliers. However‚ ex-franchisees have. He said that it was a mystery for me which products were sold at restaurants located in airports and train stations. However‚ I know that the products and ingredients are not identical to those that have been sold previously at McDonalds. SUPPLIER HEADACHE Paroev stated that Vkusno tochka will continue to produce high quality products‚ however‚ it is difficult to keep a consistent taste. Paroev stated that 99% products are Russian‚ but that a large percentage of the ingredients come from abroad. This is due to sanctions and disruptions in supply chains. Paroev stated that Vkusno tochka was looking for another drinks supplier as Coca Cola's Russia stock is declining. He said that the coffee blend would remain‚ as it is being supplied by an Indian investor‚ who purchased Finland's Paulig Russian operations. Paroev stated that‚ as per agreement with McDonalds'‚ the Big Mac will be replaced and that recipes would change. He said that this is a huge loss. It is not helping that it has been removed from the menu. Although establishing a new brand is a long process‚ Paroev remains optimistic. Our guests will soon get used to this new name‚ and they'll understand that it is no longer a Mac. (Reporting from Reuters; Editing done by Matt Scuffham & Tomasz Janowski