Sunday marks a new dawn for Russian fast food lovers as the former McDonald’s Corp (MCD.N) restaurants are reopening under a new brand and new ownership, more than three decades after the hugely popular Western fast food chain arrived.
The revival will begin on Russia Day, a patriotic holiday celebrating the country’s independence, at the same flagship location in Moscow’s Pushkin Square where McDonald’s opened in Russia in January 1990.
In the early 1990s, as the Soviet Union was collapsing, McDonald’s came to embody a thaw in Cold War tensions and provided millions of Russians with a taste of American cuisine and culture. The release of the brand is now a strong symbol of how Russia and the West are once again turning their backs on each other.
McDonald’s announced last month that it was selling its restaurants in Russia to one of its local licensees, Alexander Govor. The deal marked one of the highest-profile trade departures since Russia sent tens of thousands of troops to Ukraine on February 24.
McDonald’s iconic ‘Golden Arches’ have been dismantled at sites in Moscow and St Petersburg, where they will make way for a new logo featuring two fries and a hamburger patty on a green background. The reopening will initially cover 15 locations in Moscow and the surrounding region.
Govor said he plans to expand the new brand, which has yet to be named, to 1,000 locations across the country and reopen all of the chain’s restaurants within two months. But there can be headwinds.
It takes decades to build a brand, said Peter Gabrielsson, a professor of international marketing at Finland’s University of Vaasa, and the new launch is crucial for the brand’s future success.
“Opening day is important because it’s the first time consumers can really smell, touch and see the brand and what it stands for,” he said. “It’s important to know what the reaction will be and obviously people will compare it to McDonald’s.”
McDonald’s, the world’s largest burger chain, owned 84% of its nearly 850 restaurants across Russia and took on up to $1.4 billion after the sale to Govor, of which GiD LLC previously operated 25 restaurants.
Oleg Paroev of McDonald’s Russia said other franchisees would have the option of working under the new brand, but the traditional McDonald’s brand will leave the country. McDonald’s said it would keep its brands.
Last year, McDonald’s generated about 9%, or $2 billion, of its revenue from Russia and Ukraine. McDonald’s has the right to buy its Russian restaurants within 15 years, but many terms of sale in Govor remain unclear.
TASS news agency said on Wednesday that McDonald’s would remain open as usual at airports and train stations in Moscow and St. Petersburg until 2023, citing a source close to Rosinter Restaurants. (ROST.MM)another franchisee.
“Rosinter has a unique agreement under which the American company cannot withdraw the franchise. They can operate in peace,” TASS said citing the source.
Rosinter declined to comment. McDonald’s did not immediately respond.