Business

Russia opens affordable 'McDonald's' outlets

McDonald’s MCD.N restaurants opened their doors in Moscow once again on Sunday under new Russian ownership and a new name, “Vkusno & tochka,” which translates as “Tasty and that’s it.”

The famous Golden Arches have been taken down and replaced with a new logo, resembling a letter “M”, comprising two fries and a hamburger patty against a green background.

Chief executive Oleg Paroev said the new company had settled on the new name — a closely guarded secret — only the day before the launch.

There was some speculation on social media about how best to translate the new name into English. “Tasty and that’s it” was broadly adopted, although another suggestion was: ‘Tasty. Full stop.’

“Vkusno & tochka” reopened on Sunday in Pushkin Square in what was McDonald’s first restaurant in Soviet Moscow in 1990, when it sold as many as 30,000 burgers, but the queue outside the restaurant was much smaller than three decades ago.

The chain will keep its old McDonald’s interior but will remove any trace of its former name.

Initially, 15 rebranded restaurants will open in and around the capital, followed by another 200 restaurants by end-June and all 850 by the end of summer, executives said on Sunday.

The new owner said up to 7 billion roubles ($126 million) will be invested this year in the business, which employs more than 50,000 people.

McDonald’s flagship Big Mac and other burgers and desserts such as McFlurry are missing, but other popular items are on a smaller menu and sold at slightly lower prices.

A double cheeseburger was going for 129 roubles ($2.31) compared with roughly 160 at McDonald’s and a fish burger for 169 roubles, compared with about 190 previously.

Paroev said the chain would keep prices “affordable”. He said they would likely rise due to inflation, but not higher than its competitors, he said.

Most ingredients come from within Russia, but some items weren’t immediately available due to logistical difficulties and because some suppliers had left Russia. For instance, it needs to find a new soft drinks supplier after Coca Cola suspended business there.

Siberian businessman Alexander Govor has taken over the franchise operation through his firm GiD LLC. He had been a McDonald’s licensee since 2015 and had helped the chain expand into remote Siberia, where he operated 25 restaurants.

Russian authorities have said McDonald’s will have an option to buy its restaurants back in 15 years.

Govor told reporters on Sunday that the price he paid was “far lower than the market price” and had been a “symbolic” figure. The U.S. chain booked a $1.4 billion charge for the deal. McDonald’s did not respond to a request for comment on the price.

Russia and Ukraine accounted for about 9%, or $2 billion, of McDonald’s revenue last year.

McDonald’s former Russian head, Paroev, is running the business. Until the takeover, he had worked for McDonald’s for seven years, including as chief financial officer of the Russian business for six and a half years until November 2021, according to his LinkedIn profile.

He was appointed Russia’s McDonald’s CEO in February, weeks before Moscow sent tens of thousands of troops into Ukraine on Feb. 24.

Govor will retain the chain’s tens of thousands of employees for at least two years, the U.S. company said.


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