Who will ‘replace’ McDonald’s in Russia?
Facing that prospect, Izvestia experts ask, can Russian businesses make good use of the opportunity to fill the gap in this market?
Who left the fast food market?
“McDonald’s has decided to temporarily close all restaurants in Russia and suspend all market operations,” Chief Executive Officer Chris Kempczinski said in a statement on March 8.
According to the announcement, the company’s offices will remain operational. The company also plans to support employees and continue to pay wages, and is committed to fulfilling its obligations to suppliers and partners.
Globally, most McDonald’s facilities are operated by franchise operators. (Photo: Izvestia)
Reuters later reported that the suspension of operations in Russia would affect 847 McDonald’s fast food restaurants, costing the company about $50 million a month. The group has to pay not only the salaries of 62,000 employees, but also production facilities, as well as supply chain operations.
At the same time, Yum! Brands, the company that owns the KFC and Pizza Hut brands, also announced it would stop operating its 70 KFC stores and 50 Pizza Hut franchises in Russia. Most of KFC’s 1,000 franchises are still operating. It is known, the 1,000th facility will open in July 2021.
“They have no reason to close franchisees,” Sergei Mironov, Inspector of restaurant business in Moscow, told Izvestia.
“You can’t influence entrepreneurs who buy franchises and force them to close,” Mironov stressed.
In an interview with Izvestia, the President of the Federation of Restaurants and Hotels (FRiO) of Russia, Igor Bukharov, noted that the same applies to the Starbucks company, which mainly operates in Russia on a franchise basis.
“This franchisor in Russia will say: we have fulfilled all our obligations, which means you have to pay us compensation or we keep working.” Bukharov said.
When is McDonald’s coming back?
Experts emphasize that McDonald’s is not leaving the market, but only temporarily halting operations.
“It is clear that the money invested in Russia after 32 years, they really do not want to give up. It is a growing network that brings 10% of the company’s revenue to the world. This is a wise move, to see how things fall apart. Nobody wants to lose this money,” Bukharov said.
According to Mr. Bukharov, the company also has obligations to Russia as an investor to fulfill. And if they continue to pay workers, what are suppliers that have been trying to meet McDonald’s needs for years?
Mr. Bukharov believes that, however, the company will try to return to the market when the situation stabilizes again.
“The desire to fulfill obligations to suppliers, to pay employees within a certain period of time speaks for itself – the company hopes that the situation will return to normal in the near future and they will be back soon,” said Andrey Petrakov, CEO, RestCon in a chat with Izvestia.
In 1990, McDonald’s opened its first facility in Russia. (Photo: Global Look Press)
Meanwhile, Bukharov noted, even if the time comes, the market is divided for other competitors, McDonald’s will still find its customers.
In addition, Mr Petrakov also believes that sooner or later McDonald’s will return and customers during their “absence” should get used to going elsewhere to enjoy fast food. No, they have been with us for 30 years, this is part of our consumption, says Bukharov.
Who will replace McDonald’s?
After McDonald’s was suspended, politicians made many loud statements, proposing to open a new Russian restaurant in their location. For example, President of the Russian State Duma Vyacheslav Volodin said that McDonald’s currently uses 100% Russian raw materials and this will help open up new supply networks.
According to Moscow Mayor Sergei Sobyanin, who in a meeting with heads of commercial and service companies in the capital, said that domestic fast food chains could replace McDonald’s in six months or a year. , and at the same time he also proposed specific measurements.
“We have spoken to a number of businesses operating in this area and found that within 6 months, to a year, this entire network can easily be replaced by a domestic company. Moreover, 99% of the food is supplied by Russian suppliers,” said Sobyanin.
According to the mayor of Moscow, the authorities will ask new businesses to take advantage of the potential of employees currently working at McDonald’s.
“In addition, we will allocate 500 million rubles for preferential loans for projects that create domestic fast food chains – this move is planned to fill the niches that have been vacated by foreign chains.”, the Moscow mayor stressed.
Within 1 day, McDonald’s, Starbucks and Coca Cola each announced the termination of all operations in Russia
at Blogtuan.info – Source: cafebiz.vn – Read the original article here
