McDonald’s Russia heir longs for success, but Major Mac is a “big loss”

McDonald's Russia heir longs for success, but Major Mac is a "big loss"

Large Macs and McFlurrys might be off the menu at McDonald’s successor restaurants in Russia, however the new firm has ambitious growth targets after it sold almost 120,000 burgers, a record, on its first day, its chief executive told Reuters its CEO informed Reuters. McDonald’s Corp has completely left Russia, selling all the restaurants it owned to a local licensee in May.  Under new name Vkusno & tochka, or “Tasty and that’s it,” 50 restaurants in and around Moscow reopened on June 12 and June 13.

The McDonald’s exit saga shows both how difficult it is for Western consumer businesses that decided to leave over Moscow’s actions in Ukraine to sever all ties to Russia and for local operators to replace popular brands.

Chief Executive Oleg Paroev is keen to add locations, but acknowledged the challenge of replacing some ingredients and suppliers, as well as dealing with other franchisees still using McDonald’s branding.

Thousands who came to Vkusno & tochka’s flagship opening in Moscow’s Pushkin Square were greeted by a new logo, colour scheme and packaging shorn of all McDonald’s branding, as the new company lost the right to the U.S. group’s trademarks and intellectual property.

While Paroev does not expect such demand to last, he aims to exceed new owner Alexander Govor’s growth target and accomplish that ahead of schedule. Govor’s goal is to reach 1,000 stores in four to five years, up from around 850 under McDonald’s brand.

“On the first day we sold almost 120,000 burgers,” Paroev said. “We have never seen such daily turnover in the whole time McDonald’s has worked in Russia.”

Hiring is continuing, Paroev said, who also wants to expand cooperation with strategic partner Sberbank, though ruled out a shareholder role for Russia’s top lender.


Govor, who previously ran 25 restaurants, said at the launch that he paid a “symbolic” sum for McDonald’s Russia and that the U.S. corporation had made it clear they would not exercise a 15-year buyback option. Paroev, voicing his personal opinion, said McDonald’s could return to Russia if Vkusno & tochka became a franchisee again, but stressed there had been no discussions to that effect.

In an emailed statement, McDonald’s said it has “finalised the sale of its Russian business and exited the market.” FRANCHISE CONUNDRUM

Some former McDonald’s franchisees have kept its branding on packaging and electronic menus and are selling Big Macs under a different name, creating a headache for Vkusno & tochka. “Of course we’re not happy about this,” Paroev said.

Vkusno & tochka has proposed ex-franchisees join the new brand, Paroev said, with one having already agreed. Govor bought around 700 restaurants, Paroev said, leaving about 100 unaccounted for and while Vkusno & tochka still has access to old suppliers, other ex-franchisees do not.

Rosinter Restaurants, an ex-franchisee still operating in train stations and St Petersburg’s Pulkovo airport, did not respond to a request for comment. While continued use of the McDonald’s brand is a violation of Russian law, the company cannot take legal action because it has no rights to the brand, he said.

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