Russia, March 2, 1999
Without Dunkin Donuts, I'm outta here!March 2, 1999, Asociated Press via Johnson's Russia List
Dunkin' Donuts Leaves Moscow
RANDOLPH, Mass. (AP) -- Add doughnuts to the list of victims of Russia's economic crisis. Dunkin' Donuts, the Randolph, Mass.-based doughnut and coffee chain, has closed its two shops in Moscow.
Kim Lopdrup, chief executive officer of parent company Allied Domecq Retailing International, said Tuesday the economic crisis led to shutting one downtown shop last week that employed 20. "Sales were impacted by the economic collapse and it simply made sense to cut losses for the short term and return later," he said, adding that sales have been cut in half since August.
He said the other closure was due to a poor relationship with a franchisee who was also peddling liquor and meat pies.
Dunkin' Donuts had been in Moscow about three years, Lopdrup said.
Chicago Sun-Times, February 28, 1999
Big Mac blues in Russia
By Natalia Olynec, Bloomberg News
MOSCOW--McDonald's Corp., whose restaurant on Pushkin Square here remains its busiest worldwide, said it's slowing expansion in Russia after the ruble's 70 percent plunge since August cut many Russians' budget for burgers.
McDonald's, the world's largest restaurant company, said it may open another five restaurants in Russia this year, raising the total to 51, though it has firm plans so far for only one restaurant. That's in Kazan, the capital of Tatarstan in southern Russia, in May. In 1998, Oak Brook-based McDonald's opened 19 restaurants in Russia. "We're reviewing our plans on a regular basis," said Glen Steeves, chairman of McDonald's Russia. "In September we revised our plans and we'll be very cautious moving forward. It depends on what happens with the economy."
McDonald's, one of the earliest and biggest foreign investors in Russia, has invested about $134 million since it broke ground on its first restaurant and processing plant there in 1989. It will invest about another $7 million if it follows through with plans to open five restaurants in Russia this year.
Russia offers a "tremendous" untapped market for fast-food restaurants, Steeves said. The first restaurant, which opened to much fanfare in 1990 on Pushkin Square, still serves an average 20,000 customers daily. Consumer goods producers such as McDonald's and Pizza Hut were among the earliest foreign investors in Russia, eager to tap a new market of about 150 million people. For most, sales growth was steady as a middle class emerged during the past few years.
Then Russians' incomes plunged in dollar terms when the government defaulted on domestic debts and stopped supporting the ruble in August. Thousands of Russians also lost their savings when banks, the main holders of government bonds, shut, forcing many foreign companies to reconsider investment plans.
In October, Tricon Global Restaurants Inc.'s Pizza Hut chain said it would pull out of Moscow after 10 years there. Candymakers Mars Inc. and Nestle SA said they cut back Russian operations last year, and this month, Royal Grolsch NV, the Dutch brewer, said profit showed little growth in the second half of 1998 in part because of declining exports to Russia.
McDonald's has 46 restaurants in Russia and has concentrated them near Moscow, where incomes are higher than the official national average of 970 rubles ($41) per month. "The food is good and the prices are not too high," said Vladimir Kristev, 35, a businessman eating at a McDonald's restaurant a block away from Red Square. "I think for most Russian people it's very expensive, but for me it's affordable." A Big Mac costs about $1.46 in Moscow, compared with $1.59 in Prague, $2.83 in Frankfurt and $3.10 in London.
McDonald's, which employs about 5,000 in Russia, is testing products that cater to Russian tastes, such as cabbage salad and mushroom soup, Steeves said. Still, he said, the company will wait for the economy to pick up before expanding aggressively. "We're seeing the effect of devaluation in the amount of customers and softening of trends," Steeves said. "It's difficult to say what will happen with the economy. The government is taking things very slowly."