McDonald’s in Russia – Defeated

Communism with a “Happy” Meal

Overview
Serving more than 58 million customers every day, McDonald’s
Corporation is the world’s major chain of hamburger fast food
restaurants. The name as well as the hamburgers is “digested” easily
by celebrities or common man. To pursue its endeavors in emerging
markets, McDonald’s stalled its growth in developed nations and
leaped in Russia which had emerged as a major economic force in the
world.
It was George Cohen, head of McDonald’s Canada, who started an
almost impossible dream of introducing a McDonald’s hamburger in
Russia. It took 12 years of efforts and finally in April 1988, he convinced
the officials of Moscow that McDonald’s can be set up in Russian
culture.
After 14 years of intense negotiations; McDonald’s finally entered into
the Soviet Union on January 31, 1990. This flagship store located in
Moscow’s Pushkin Square, was the world’s largest McDonald’s
boasting of 28 cash registers and seating capacity for around 700
customers. The first day of McDonald’s in Russia broke the record for
inaugural sales in McDonald’s history serving more than 30,000
customers on the first day itself.
The Pushkin Square McDonald’s is the world’s busiest McDonald’s
restaurant serving more than 20,000 customers daily. As the fast food
market in Russia is growing rapidly, McDonald’s is trying to expand its
presence throughout the country
McDonald’s Strategy in Russia -
McDonald’s offers a series of signature items that are served in restaurants all
over the world. To enhance the local food preferences, McDonald’s Russia
have included potato wedges, cabbage pie and cherry pie.
In the year 2005, McDonald’s initiated breakfast menu and stronger coffee at
different locations in Moscow that enabled commuters who left early for work,
to avoid traffic and eating out.
McDonald’s has also implemented a concept restaurant within its McDonald’s
restaurant known as McCafe which is separated from its main dining area and
serves coffee, soft lights and desert menu. This concept of McCafe originated
in Australia; the Russian officials say that McCafe has become a huge hit in the
locations where it had been implemented in Russia.
The Pushkin Square McDonald’s as well as the Arbat are two of the locations
where the McCafe was introduced. The Pushkin Square McCafe serves an
average of 600 transactions per day and it is seen that 6 out of 10 people
prefer to have beverages at McCafe than other restaurants. The pricing of the
beverages have been kept within the Russian budget and their competitors
Starbucks.
McDonald’s Russia has a modified menu that can appeal to the local masses.
This includes cabbage pies, potato wedges and cherry pie.
This strategy by McDonalds have been applauded by one and all, as
McDonald’s have captured the minds of the Russia masses who have
developed a taste of McDonald’s as well as their quality.
Criticism

The Economist, an English language weekly publication developed a Big Mac Index which
informs about the real cost of currency. According to this, the fair price of one dollar in Russia
should be around 15 rubles which is around 31 rubles at present. There is surely awareness
about the role that McDonald’s restaurants play in the world financial neocolonialism. It is a fact
that anti-Americanism has economic grounds and the measures against McDonald’s are
proficient of bringing certain outcomes.

If the McDonald’s in Russia were to shut down, it would deny USA of its dollar cost
measurement tool on Russian soil and once this “Neocolonial system” collapses, Russia will be
able to regain its “Lost Independence”. It is just the Russian government that can close down
McDonald’s or at least they can complicate the business to choke it off and finally make it
wither away.

Some of the McDonald’s employees in Russia say that the wages paid to them are quite low. It
has been observed that these employees are usually under 21 and majority of them quit within
4-5 weeks. Furthermore, McDonald’s say that they need not pay more to their employees, as
working in McDonald’s doesn’t require special skill. This view of McDonald’s has been highly
criticized and the entry of McDonald’s is considered as growing Authority of America, animal
abuse, ruthless earning of profit, unecological, unhealthy food and exploitation of workers.
The mass use of refrigeration by McDonald’s have been said to contribute towards global
warming. There was a recent stir in the global media which reported that an artist bought a
McDonald’s Happy Meal, set it out on a plate and left it as it is. The Happy Meal stood on the
table unaffected for as long as 180-days without forlorn and odor. Thus, a big question arises
about this Kid’s food which is unaffected and did not turn moldy after months of exposure to
open air.
Growth and Future prospects of McDonald’s in Russia
After the opening of first McDonald’s in Russia it just went one
way – UP. In 2002, McDonald’s was active in 23 cities which had
a total number of 74 restaurants consisting of 9,000 employees.
In 2005, it grew to 37 cities with 17,000 employees. Recently,
McDonald’s marked 20 years of business in Russia having
expanded its business in 60 Russian cities with over 245
restaurants that serve around 950,000 customers daily with the
help of its 25,000 employees. The US based food service giant
said that in 2010 they will be investing $135 million with a view to
inaugurate 45 restaurants.
With the ever-increasing revenues of McDonald’s in Russia it is
quite visible that the Russians are open to the Burger Revolution
by McDonald’s. It also made sure to hit the last nail in the
Russian Communism coffin and since then it was no looking
back for McDonald’s which is just expanding in Russia every
day. Maybe, a new McDonald’s store opened meanwhile this
case study is complete.