McDonald’s pledges more investment in Russia

By Reuters
Posted March 2 at 8:25 a.m.

McDonald’s Corp. plans to boost investment into expansion of its Russian business this year to increase its foothold in the growing fast food restaurant market amid still sluggish competition.

“We plan to open at least 40 new restaurants this year, and investments will be significantly higher than last year,” McDonald’s Russia President Khamzat Khasbulatov said on Wednesday.

The world’s biggest restaurant chain opened 31 eateries in Russia in 2010, bringing its total to 275, and invested more than 5 billion roubles ($174.2 million) in openings and renovations, Khasbulatov told a news conference.

“Our priority for 2011 is the opening of new restaurants… If we have an opportunity to open even more than we plan, we have enough resources to do that,” he said adding that the group planned to expand its Russian chain by 15 percent each year.

Khasbulatov said Russia was the group’s most aggressively developing market in Europe, with a 140 million plus population and the lack of a “big competitive struggle” underpinning potential of the market growth.

Global retail and restaurant chains have been increasingly looking to expand in emerging markets like Russia, China and India, to tap opportunities that their large populations, growing middle-class and consumption provide.

McDonald’s smaller rival Burger King entered the Russian market last year through a venture with a local partner but has yet to gain speed and weight in the highly fragmented market.

In contrast, McDonald’s famously opened in Moscow in 1990 — before the collapse of the Soviet Union.

U.S. competitor Subway, the world’s No.2 restaurant chain by sales, plans to expand its Russian network to 1,000 outlets by 2015 from nearly 100 now.

McDonald’s has yet to expand out of the European part of Russia due to infrastructure and logistics issues, Khasbulatov said.

The company will open nearly 20 outlets in the Moscow and St Petersburg regions in 2011 with the rest happening in European Russia, but the company also has its eyes on the eastern part of the country.

“Russia is enormous, there are regions where we are not yet present like West, Central and East Siberia — a region with population of more than 20 million, and we have yet to tap them,” Khasbulatov told Reuters.

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