McDonald’s in Russia

[UK]

Did not find MCD thread, so will post it here, long but interesting story:

 

https://www.bloomberg.com/news/features/2023-01-04/mcdonald-s-won-big-in-russia-until-the-ukraine-invasion?srnd=premium-europe

 

Why did McDonald’s thrive where other fast-food businesses failed? I asked Andrey Dellos, a renowned Russian restaurateur whose holdings include Mu-Mu, a downscale Russo-centric chain, and Café Pushkin, located in a Baroque-style mansion across from the flagship Golden Arches. “McDonald’s success in 1990 was not a question of taste. It was not a question even of food,” he said over espresso at his cafe. “Communists made a fantastic mistake when they closed the doors. They made the United States a dream. For practically all the Soviet people, the United States was a real paradise.” Dellos gestured out the window across Pushkin Square. “And now, can you imagine—a piece, a sample, of that paradise appears just over there?” The Wild Nineties came to an emphatic end in Russia with the 1998 ruble crisis, which saw the near-collapse of its banking system and an exodus of foreign capital from its markets. With imports now a major financial gamble, McDonald’s began what would become a multidecade push to increase its share of locally sourced ingredients from just a quarter. The Russian economy eventually rebounded, and by the late aughts, other chains’ boards were dusting off their strategic plans. Burger King arrived in 2010. Dunkin’ Donuts returned the same year. Cinnabon International Inc. and Wendy’s Co. entered, too. All the while, Russia’s oligarchs looked on with frustration and a desire to domesticate fast food—so the experience would be nash (“ours”), according to Melissa Caldwell, a professor at the University of California at Santa Cruz, who studies food in post-Soviet Russia. They spent fortunes attempting to siphon away customers by shamelessly emulating McDonald’s, echoing a dubious Russian tradition. (Caldwell notes that the Kremlin under Nikita Khrushchev marketed kvass, a fermented-bread drink, as Communist Coca-Cola.) One, Blin! Donalt’s, opened in 2002, attempting to turn Russia’s blini pancake into a Big Mac-killer. Owned by Yevgeny Prigozhin, the billionaire food baron who later became notorious for controlling the Internet Research Agency troll factory, it had red and yellow colors as well. Blin! Donalt’s dissolved in 2012. Far more successful was Mikhail Goncharov. After going bankrupt during the 1998 ruble crisis, he took his mother’s blini recipes and started a street stall in St. Petersburg that became the ubiquitous chain Teremok. Goncharov told me that the banks would loan McDonald’s money, but not Teremok at first. He’s complained to Russian media that this shortage of funds forced him to learn which authorities to pay off and which oligarchs to offer stakes in the company. Seeking to grow, Goncharov conducted a hypertargeted competitor analysis. “At the beginning, I went and found a McDonald’s training manual,” he said as I tried the cheese blini, chicken noodle soup and Teremok-brand kvass that he ordered for me at a north Moscow outlet, pre-pandemic. These manuals were near-encyclopedic restaurant management guides, a 3-inch binder filled with strategy that had been translated into Russian. Goncharov said Teremok followed their instructions carefully. Workers learned to prep toppings in advance and to deploy what he called the “psychological tactic” of smiling to disarm upset customers. Goncharov also became a public thorn in McDonald’s side, seeking to appeal to Russian patriotism. Even as he was expanding his chain to 100 locations by 2010 and more than 300 today, he blasted the rival’s executives as a bunch of “bastards,” demanded regulations that benefited smaller domestic competitors such as Teremok and released a blini that he said “tastes like a Big Mac” on McDonald’s 30th anniversary. For a time, McDonald’s could mostly shrug at the competition. In 2010 it had hundreds of locations spanning from the Baltic Sea to southwest Siberia. Per-store traffic was two times greater than its next-busiest international market’s. It had bought out the Russian government’s half of the joint venture and ranked among the country’s largest corporate landowners. It also boasted of selling the most ice cream there and pouring 1 in every 3 cups of coffee.