McDonald’s investing in Russia

McDonald’s investing in Russia

While many international businesses are still fighting shy of investing in Russia, US fastfood group McDonald’s has drawn back the curtain on plans to spend US$100m (??84.8m)on new outlets in the beleaguered nation. While 14 new restaurants are scheduled to welcome their first customers this year, McDonald’s hopes to grow its number of outlets in Russia from 43 to 100 by the year 2001.

While spokespersons admit that the financial turmoil buffeting the Russian economy has negatively impacted sales, they remain confident that prospects are good. This confidence is based to a large degree on the fact that 75-80% of the raw materials McDonald’s uses in Russia is sourced locally.

HEAVY INVESTMENTS

McDonald’s has braved out the ongoing crisis in Russia and even opened eight new restaurants in the second half of the year. The group has been active in Russia since 1985, since when it has invested some US$200m on restaurants in and around the capital city of Moscow, as well as other outlets in St. Petersburg, Novgorod and Yaroslavl.

RED FACES IN UK

Meanwhile, in the UK McDonald was forced to eat humble pie when it ran out of its flagship BigMac product after launching a two-for-one promotion. The campaign led to demand twice that which was forecast. McDonald’s took out full-page adverts in several national newspapers in a bid to appease disappointed consumers who had scoured their towns for restaurants able to fulfill the promise.

While McDonald’s wasted no time implementing its damage limitation campaign, employees at rival fastfood group Burger King were rubbing their hands with glee. BK has just announced plans to open 100 new UK outlets.

COPYRIGHT 1999 Agra Europe Ltd.

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