McDonald’s Eyes Siberia for ‘Big Mac Attack’ - Global Trade Magazine
  September 3rd, 2015 | Written by

McDonald’s Eyes Siberia for ‘Big Mac Attack’

[shareaholic app="share_buttons" id="13106399"]

Sharelines

  • McDonald’s currently operates six outlets in Novosibirsk, and 500-plus restaurants across Russia.
  • McDonald’s operations in Russia generate about 10 percent of McDonald’s European operating profit.
  • The Russian Ministry of Finance last year threatened to level tax evasion against Ronald McDonald House.

The mere mention of the word Siberia and the minds of most Westerners conjure up visions of 5 million square miles of frozen tundra, vast forests and people who are extremely cold most of the time.

But, mention the word to the folks at McDonald’s and they see potential.

Despite past troubles with the Moscow bureaucracy, the multi-national fast-food behemoth has signed a $44 million franchise agreement with the investment and development firm Inrusinvest, to open 20 additional outlets next year in Siberia’s Kemerovo, Novosibirsk, Tomsk and Altai regions.

Currently, Illinois-based McDonald’s operates six outlets in Novosibirsk, which will be managed by Inrusinvest, as well as a shop in the city of Tyumenas, according to a report in The Siberian Times.

The company, which opened its first restaurant in Russia in 1990, has 500-plus restaurants across the country, mostly in the more heavily populated western part of the country. More than 100 are in Moscow and the surrounding region with more than 60 in St Petersburg, Russia’s second largest metropolitan area.

McDonald’s operations in Russia generate about 10 percent of McDonald’s European operating profit,  making the country one of its top seven major markets outside the US and Canada.

It’s interesting to note, too, that the company, while seen by some as an icon of U.S. cultural imperialism, sources some 85 percent of the food products and sundry supplies used at its Russian outlets from local businesses.

The company came under fire last year when the Russian Ministry of Finance threatened to level tax evasion and money laundering charges against Ronald McDonald House Charities, which operates a sports facility for physically and mentally disabled children in Moscow, and a residential facility near a children’s hospital in Kazan, 450 miles east of Moscow.

At the time, a high-ranking Ministry official said that, “They use donations from ordinary Russians, so that is why we want to know how this money is spent. I am talking only about financial aspects of their activities, and technical questions about their work. We do not want you to think that we have political reasons for doing this.”

The “this” was not only the threat of shutting down the charity altogether, but also temporary closure of 12 of  McDonald’s busiest outlets in Moscow, Yekaterinburg, Volgograd and Sochi, the Black Sea resort that hosted the 2014 Winter Olympics for alleged violations of Russian health and sanitary codes.

The investigation was seen in the West as a slap-back at the economic and financial sanctions put in place earlier in 2014 by the U.S. in response to Russia’s military incursion into neighboring Ukraine, and McDonald’s decision to shutter its outlets in the Crimean cities of Simferopol, Sevastopol, and Yalta following the seizure of the Crimea by Russian troops.