The tour guide, with his favorite McCafe drink in hand, will walk through the snow-covered streets of the city to show, for example, the building of the St. Petersburg Mutual Credit Society, the first building specifically built in Russia for a commercial bank . “The building resembles palace buildings from the Renaissance era,” according to a translation of the video message.
The relationship McDonald’s has with its Russian customers is unusual: it’s part hustler, part history teacher, part corporate benefactor, part Stuart Smalley. “Let’s write our sincere wishes and congratulations for the coming year in the comments and enter 2022 with a good mood,” read a translated Instagram post from December 30.
Nearly two weeks after Russian troops invaded Ukraine, and after activists and investors pressured the company, McDonald’s announced on Tuesday that it would temporarily close 850 restaurants in Russia. In the announcement Chris Kempczinski, Chief Executive of McDonald’s, said: “Our values mean we cannot ignore the needless human suffering taking place in Ukraine.” He also acknowledged the close relationship the chain has developed with Russians in the 32 years since Golden Arches opened its first restaurant in 1990, when the country was still under Soviet control.
“In Russia, we employ 62,000 people who have invested their hearts and souls in our McDonald’s brand to serve their communities,” Kempczinski said in an email to employees and franchisees. “We work with hundreds of local Russian suppliers and partners who produce our menu foods and support our brand. And we serve millions of Russian customers who rely on McDonald’s every day.
“In the more than thirty years that McDonald’s has operated in Russia, we have become an essential part of the 850 communities in which we operate.
But McDonald’s was also in a unique position to cut its ties, albeit temporarily. Unlike many fast food chains whose international units are operated by franchisees, McDonald’s owns 84% of its restaurants in Russia. As one industry expert told The Washington Post, McDonald’s has made a seismic shift with its decision to put humanitarian concerns above shareholder profits. According to a company filing, McDonald’s restaurants in Ukraine and Russia accounted for 9% of the company’s revenue in 2021 because the chain has so many outlets.
McDonald’s stock prices have been falling steadily since the Russian invasion began on Feb. 24.
But in making its decision, McDonald’s also had to do more than forgo profits: It had to sever ties with the communities it’s served for decades – and with the supply chains it’s created, virtually from You’re welcome. Within days, an unprovoked war wipes out, indefinitely, what it took McDonald’s more than 30 years to build.
When the first McDonald’s opened in 1990 in Moscow’s Pushkin Square, a stone’s throw from the Kremlin, the beginnings were seen for what they were: the free market system poking its camel’s nose under the iron curtain. .
Because of endless politics and bureaucracy (one person later claimed that opening a single McDonald’s in Russia required 200 signatures from local elected officials), it took 14 years for George Cohon, president of McDonald’s Restaurants of Canada, to launch the first fast food establishment in Russia. the former Soviet Union. He made sure to do it right. He built the largest McDonald’s at that time – a 23,680 square foot restaurant, with 27 registers and seating for 700 customers on multiple levels.
Early on, Moscow’s McDonald’s accepted rubles, which made the fast food oddball even more appealing to ordinary Russians. “A shrewd strategy that should attract local customers, increasingly eager to see quality products sold only for foreign currency,” wrote a Time magazine reporter in a February 1990 article.
A New York Times reporter wrote at the time: “Usually Muscovites can simply salivate at several lavishly stocked grocery stores and restaurants recently opened for Westerners, exclusive markets that want none of the rubles with no international value and therefore bear the sign : “For hard currencies only”. ‘”
Tens of thousands of people showed up on opening day, including politicians and celebrities, even though a meal (burger, fries and drink) cost around 5.5 rubles at the time. “The equivalent of half a day’s wages for the average worker,” noted the Moscow Times in a 30-year retrospective of the first McDonald’s. Russians lined up in long lines – a familiar routine – to taste a “Big Mak” for the first time. The store sold “34,000 burgers on its first day, breaking the burger chain’s previous record of 9,100 first days,” The Moscow Times reported.
But McDonald’s has done more than open restaurants in Russia. The company has built an infrastructure to supply products and ingredients to the chain’s growing number of storefronts. This decision was both practical and necessary if McDonald’s was to maintain its standards: for starters, the ruble was difficult to convert into foreign currency, so it made sense for McDonald’s to invest the money earned domestically. But Russia was also famous for its shortages. So the company decided to build a factory outside Moscow to process beef, produce sauces and test quality control.
McDonald’s brought in agronomists to help Russian farmers grow non-native potatoes. The company enlisted bakers from Canada, the United States and Europe to develop baking systems for the line. Executives brought in meat experts to help Russian herders raise their cattle. In 1999, between 75 and 80 percent of the company’s raw materials “came from more than 100 local producers in Russia,” according to a 2010 report by the IBS Center for Management Research.
McDonald’s, the report adds, “has made a significant contribution to the development of the restaurant and processing industries, agriculture and business practices in Russia.”
But the channel has also helped bring Russian culture into the age of convenience. He not only introduced McDonald’s signature foods to the country, but also breakfast menus and even drive-thru. “Initially, people bought food at drive-thru counters, then parked their cars around the store and went inside restaurants to eat what they bought,” according to the 2010 IBS report.
As in all countries where McDonald’s opens restaurants, the chain hasn’t been content to push its Western offerings down Russian throats. It worked to cater to local palates. In the late 1990s, when the Russian economy was hit by hyperinflation, McDonald’s tried to attract customers by adding Russian dishes to the menu, including “coleslaw, burgers with pork patties, chicken and mushroom soups, all locally sourced,” according to a 2008 case study.
McDonald’s has also introduced items seemingly unavailable in stores outside of Russia, including bone-in chicken wings, McShrimp and even a wannabe McWrap stuffed with those fried shrimp. But even the regular menu items seemed to be a cut above the same versions elsewhere: In 2019, a Business Insider reporter ordered a Big Mac from the original McDonald’s that opened in Moscow and compared it to the one available. At New York.
“The Russian Big Mac seemed to have the same ingredients as its American counterpart – two beef patties, American cheese, lettuce, onions, pickles and the signature Big Mac sauce – but it just tasted better“wrote Katie Warren.
Given this history, it’s no surprise that Russians flocked to McDonald’s in the hours before all 850 restaurants closed. As they did in 1990 with the first location, Russians were once again lining up to taste a Big Mak. This time they were even waiting in their cars at the drive-in.
On Wednesday, several hours after Kempczinski had already made his announcement, the McDonald’s Russia Instagram account finally posted the news.
“Dear friends!” the translated message begins. “It is very difficult for us to report this news, but due to the current situation, McDonald’s must temporarily suspend all businesses in our network.”
The company, keen to maintain the relationships it has developed, made a point of saying that it will continue to pay its Russian employees during this period.