The guide, with his favorite Maccafe drink in hand, will walk through the snow-covered streets of the city to point out, say, the building of the St. Petersburg Mutual Credit Society – the first building specially built in Russia for a commercial bank. “The building is reminiscent of renaissance palace buildings,” the translation of the video post says.
McDonald’s relationship with its Russian customers is unusual: part fraudster, part history professor, part corporate benefactor, part Stuart Smalley. “Let’s write to each other in the comments sincere wishes and congratulations for the coming year and go into 2022 with a great mood,” reads the translated Instagram post dated December 30.
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Nearly two weeks after Russian troops invaded Ukraine and after activists and investors put pressure on the company, McDonald’s announced on Tuesday that it would temporarily close 850 restaurants in Russia. In a statement, Chris Kempczynski, chief executive of McDonald’s, said: “Our values mean we cannot ignore the unnecessary human suffering going on in Ukraine.” He also acknowledged the close relationship the chain has had with Russians in the 32 years since Golden Arches opened its first restaurant in 1990, when the country was still under Soviet control.
“We employ 62,000 people in Russia who have put their heart and soul into our McDonald’s brand to serve their communities,” Kempchinski said in an email to employees and franchisees. “We work with hundreds of local, Russian suppliers and partners who produce products for our menu and support our brand. And every day we serve millions of Russian customers who rely on McDonald’s.
“In over thirty years of McDonald’s operations in Russia, we have become an important part of the 850 communities in which we operate.”
But McDonald’s also had a unique opportunity to end the relationship, albeit temporarily. Unlike many fast food chains whose international divisions are operated by franchisees, McDonald’s owns 84 percent of its restaurants in Russia. As an industry expert told The Washington Post, McDonald’s has made a fundamental corporate shift by deciding to put humanitarian interests ahead of shareholder profits. According to corporate documents, McDonald’s restaurants in Ukraine and Russia brought in 9% of the company’s revenue in 2021, because the network owns a lot of outlets.
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McDonald’s stock price has been steadily falling since the Russian invasion began on February 24.
But in making its decision, McDonald’s also had to do more than just give up profits: It had to sever ties to communities it had served for decades and supply chains it had created out of thin air. In a matter of days, an unprovoked war destroyed for an unknown period of time what McDonald’s had been building for over 30 years.
When the first McDonald’s opened in 1990 on Pushkinskaya Square in Moscow, a short walk from the Kremlin, its debut was taken for what it was: a free-market system poking its camel nose under the Iron Curtain.
Due to politics and endless red tape (later one person claimed that opening the only McDonald’s in Russia required 200 signatures from local officials), George Cohon, president of McDonald’s Restaurants of Canada, took 14 years to open the first fast food restaurant in former Soviet Union. He made sure he did it right. He built the largest McDonald’s of the time, a 23,680-square-foot restaurant with 27 registers and a capacity for 700 customers on multiple levels.
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From the very beginning, McDonald’s in Moscow accepted rubles, which made fast food violators even more attractive to ordinary Russians. “A shrewd strategy that is expected to attract local buyers who are increasingly impatient to see quality goods sold only for foreign currency,” wrote a Time magazine reporter in a February 1990 article.
At the time, a New York Times reporter wrote: “Usually, Muscovites can just salivate outside a few affluent grocery stores and restaurants recently opened to Westerners, exclusive malls that don’t need internationally devalued rubles, and so they have a sign: “Only for hard currency. ‘”
Tens of thousands of people came to the opening day, including politicians and celebrities, although the food (burger, fries and drink) then cost about 5.5 rubles. “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. The Russians waited in long lines, a routine they are familiar with, to try the Big Mac for the first time. The store sold “34,000 hamburgers on the first day — breaking the chain’s previous first-day record of 9,100,” according to the Moscow Times.
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But McDonald’s has done more than just open restaurants in Russia. The company has built the infrastructure to provide products and ingredients to a growing number of chain stores. The move was both practical and necessary if McDonald’s wanted to maintain its standards: First, the ruble was hard to convert into foreign currency, so it made sense for McDonald’s to invest the money it earned domestically. But Russia was also famous for its deficit. Therefore, the company decided to build a beef processing plant, sauce production and quality control testing near Moscow.
McDonald’s hired agronomists to help Russian farmers grow foreign potatoes. The company brought in bakers from Canada, the US and Europe to develop baking systems for the chain. The leaders sent meat experts to help Russian ranchers raise cattle. By 1999, 75 to 80 percent of the company’s raw materials “came from more than 100 local producers in Russia,” according to a 2010 IBS Center for Management Research report.
The report states that McDonald’s “has made a significant contribution to the development of catering and processing industries, agriculture and business practices in Russia.”
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But the web has also helped propel Russian culture into an age of convenience. He introduced the country not only to iconic McDonald’s products, but also to breakfast menus and even transportation. “Initially, people bought food in the window, then parked their cars around the store and went into restaurants to eat everything they bought,” according to a 2010 IBS report.
As in every country where McDonald’s opens restaurants, the chain didn’t just shove its Western offerings down Russia’s throats. This worked to suit local tastes. 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 “cabbage salads, pork cutlet burgers, chicken and mushroom soups, all of which were locally produced.” to the 2008 case study.
McDonald’s also introduced products apparently not available in stores outside of Russia, including bone-in chicken wings, McShrimp, and even a wannabe McWrap stuffed with these fried shrimp. But even the regular menu items seemed to be head and shoulders 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 in New York. .
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“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 only tasted better.” Kathy Warren wrote.
Given this history, it’s no surprise that Russians flocked to McDonald’s hours before the company shut down 850 restaurants. As in 1990 with the first establishment, the Russians again stood in long lines to try the Big Mac. This time they were even waiting in their cars on the way.
On Wednesday, hours after Kempchinski had already made his announcement, the news finally broke on McDonald’s Russia’s Instagram account.
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“Dear friends!” the translated post begins. “It is very difficult for us to share this news, but due to the current situation, McDonald’s is forced to temporarily suspend all businesses in our network.”
The company, keen to keep the relationship going, said it would continue to pay its Russian employees during this period.