News / Europe

McDonald's Still Thriving in Russia After 20 Years

McDonald's crew and founder at the opening in Pushkin Square, 31 Jan 1990
McDonald's crew and founder at the opening in Pushkin Square, 31 Jan 1990

McDonald's, the U.S. based food service giant, has marked 20 years of business in Russia. The Pushkin Square McDonald's, the first outlet in the country, is still the busiest in the world. 

It took 14 intense years of negotiations for McDonald's to get entry into the Soviet Union. 

And as the company marked the 20th anniversary of the opening of the first landmark restaurant under Soviet rule in 1990, CEO James Skinner said McDonald's will expand by 45 outlets in Russia by the end of this year.

George Cohon founded McDonald's in Russia and Canada. He says discussions were very slow, not to mention painful.

"We took our time; we had to explain what McDonald's is. There were many levels of pessimism. First level was you will never make the deal. Well it took us 14 years, but we made it," said Cohon.  "Next level, was well, you won't get good employees. And my answer to that one always was who wins the Olympics? Who gets the most medals in the Olympics? The former Soviet Union. And then the one that really made me laugh. It won't last. You're gonna open and you're going to go away."

In 1990, the Soviet Union was in shambles, the economy was collapsing and political turmoil was rife.

Khamzat Khasbulatov started out as manager of the country's flagship store at Pushkin Square and is now president of McDonald's Russia.

He says the political system was entirely different, the economy was different, the country was named differently. It was virtually impossible to predict what the future held. Even the currency was not convertible because there was hyperinflation.

Despite the odds patrons lined up, some for nearly 10 hours in sub-freezing temperatures, to get a glimpse of the American fast-food icon.

Natalya Kolesknikova told Russian State Television, that McDonald's offered her the first taste of freedom, in a closed country.

She says it was like going to a major event and that people from all over Moscow, and even outside of the city, drove for the opening. She says McDonald's played a very important role in Russia and that when guests came to visit, she showed them two things,  the Kremlin and McDonald's.

Kolesnikova's attitude towards the restaurant is shared by many Russians. The location at Pushkin Square is the most popular McDonald's in the entire world.  Over the past 20 years, it has served more than 130 million customers.

So what makes the fast-food chain so popular in the former Soviet Union?  Cohon says McDonald's did something that Communist officials had consistently failed to do.

"I think that we delivered what we promised," he said.  "We said we could bring quality food and clean surroundings at a price people could afford and we did that."

When Cohon was asked whether the burger giant ever had to adapt or compromise its tastes to sell its products, he replied.

"A Big Mac is a Big Mac is a Big Mac anywhere around the world. The taste is the taste," he said.  "One or two products maybe different, but it should be the same taste around the world."

And apparently Russians like the Big Mac. McDonald's serves nearly one million customers daily.   As a result, the company has big plans for the future.

"We will invest in 2010 more than we ever have in the past," said Denis Hennequin, president of McDonald's Europe.  "2009 record year but we will grow investment by 20 percent. Russia will be leading with a record number of openings."

Cohon says he's not surprised by McDonald's success and he expects that it will continue.

"Once they tasted it I always thought that they'd love it," he said.  "They vote with their feet and they walk in here more than anywhere else."

The company now runs restaurants in 60 Russian cities and plans to spend $135 million on its expansion there this year.
 

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