McDonald's to expand in Russia with restaurants in Siberia
McDonald's has announced a license agreement to open restaurants in Siberia, extending the status of US corporate dominance, despite the strained relations between Russia and the US.
The fast food company released a statement confirming that the deal would see Russian company GiD LLC open around 20 fast-food restaurants in the Novosibirsk, Tomsk, Kemerovo, and Altai regions “in the nearest future”.
Prior to this, only one franchise agreement has been made in Russia with a restaurant in St. Petersburg's Pulkovo airport. McDonald's has a significant presence in Russia with more than 500 restaurants in 125 cities however franchise agreement could pave the way for more Russian business to take up the opportunity.
The deal will also help the burger chain compete with Subway which already has over 78 franchises in the region and is dominating McDonald's in the number of global restaurants.
President of McDonald’s Russia, Khamzat Khasbulatov, said that the “agreement with GiD will help enhance the McDonald’s brand in Russia, build the business over the long term and further strengthen the relationship with our customers”.
Last summer McDonald’s faced regulatory pressure when Russian authorities carried out unannounced inspections and enforced temporary closures at 200 McDonald’s restaurants for what it claimed were sanitary violations. The checks coincided with an increase in tensions with the US over Ukraine and so McDonald's hopes that the franchise deal will help the company to expand in the region while preventing further trouble given that they will be Russian owned franchises .
The McDonald's brand has been damaged in recent weeks after union leaders, politicians and workers from a number of countries testified at the Brazilian senate over McDonald’s business practices, raising concerns over the way it or its franchisees treat staff, the level of wages and its tax payments in Europe. The hearing led to the creation of a task force to investigate allegations of labour law violations by McDonald’s in Brazil