Bye Bye Fast Food

1999 > Russia

Without Dunkin Donuts, I’m outta here!

March 2, 1999, Asociated Press via Johnson’s Russia List

Dunkin’ Donuts Leaves Moscow

Mass. (AP) — Add doughnuts to the list of victims of Russia’s economic crisis.
Dunkin’ Donuts, the Randolph, Mass.-based doughnut and coffee chain, has
closed its two shops in Moscow.

Kim Lopdrup, chief executive officer of parent company Allied Domecq Retailing
International, said Tuesday the economic crisis led to shutting one downtown
shop last week that employed 20. “Sales were impacted by the economic collapse
and it simply made sense to cut losses for the short term and return later,”
he said, adding that sales have been cut in half since August.

He said the other closure was due to a poor relationship with a franchisee
who was also peddling liquor and meat pies.

Dunkin’ Donuts had been in Moscow about three years, Lopdrup said.

Chicago Sun-Times, February 28, 1999

Big Mac blues in Russia

By Natalia Olynec, Bloomberg News

MOSCOW–McDonald’s Corp., whose restaurant on Pushkin Square here remains
its busiest worldwide, said it’s slowing expansion in Russia after the ruble’s
70 percent plunge since August cut many Russians’ budget for burgers.

McDonald’s, the world’s largest restaurant company, said it may open another
five restaurants in Russia this year, raising the total to 51, though it
has firm plans so far for only one restaurant. That’s in Kazan, the capital
of Tatarstan in southern Russia, in May. In 1998, Oak Brook-based McDonald’s
opened 19 restaurants in Russia. “We’re reviewing our plans on a regular
basis,” said Glen Steeves, chairman of McDonald’s Russia. “In September
we revised our plans and we’ll be very cautious moving forward. It depends
on what happens with the economy.”

one of the earliest and biggest foreign investors in Russia, has invested
about $134 million since it broke ground on its first restaurant and processing
plant there in 1989. It will invest about another $7 million if it follows
through with plans to open five restaurants in Russia this year.

Russia offers a “tremendous” untapped market for fast-food restaurants,
Steeves said. The first restaurant, which opened to much fanfare in 1990
on Pushkin Square, still serves an average 20,000 customers daily. Consumer
goods producers such as McDonald’s and Pizza Hut were among the earliest
foreign investors in Russia, eager to tap a new market of about 150 million
people. For most, sales growth was steady as a middle class emerged during
the past few years.

Then Russians’ incomes plunged in dollar terms when the government defaulted
on domestic debts and stopped supporting the ruble in August. Thousands of
Russians also lost their savings when banks, the main holders of government
bonds, shut, forcing many foreign companies to reconsider investment plans.

In October, Tricon Global Restaurants Inc.’s Pizza Hut chain said it would
pull out of Moscow after 10 years there. Candymakers Mars Inc. and Nestle
SA said they cut back Russian operations last year, and this month, Royal
Grolsch NV, the Dutch brewer, said profit showed little growth in the second
half of 1998 in part because of declining exports to Russia.

McDonald’s has 46 restaurants in Russia and has concentrated them near Moscow,
where incomes are higher than the official national average of 970 rubles
($41) per month. “The food is good and the prices are not too high,” said
Vladimir Kristev, 35, a businessman eating at a McDonald’s restaurant a block
away from Red Square. “I think for most Russian people it’s very expensive,
but for me it’s affordable.” A Big Mac costs about $1.46 in Moscow, compared
with $1.59 in Prague, $2.83 in Frankfurt and $3.10 in London.

McDonald’s, which employs about 5,000 in Russia, is testing products that
cater to Russian tastes, such as cabbage salad and mushroom soup, Steeves
said. Still, he said, the company will wait for the economy to pick up before
expanding aggressively. “We’re seeing the effect of devaluation in the amount
of customers and softening of trends,” Steeves said. “It’s difficult to
say what will happen with the economy. The government is taking things very