Growth | June 2014 | By Keith Loria

To Russia, With Love

Quick-serve brands find success in Russia, despite its uneven political climate.
Fast food chains grow in Russia as country stirs up controversy.
Atlanta-based Cinnabon entered Russia in 2009 and has since grown to 118 units across the country. cinnabon
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A new report by The NPD Group, which provides global foodservice market research, shows a 7 percent increase in foodservice visits in Russia over the last quarter of 2013, making it No. 1 in traffic growth among nations NPD tracks.

That’s a relief to American quick-service operators, who are headed to the country in large numbers despite a political environment that has grown tense in the last several months.

“The Russian market is very young, with just about 20 years of history,” says Maria Bertoch, head of NPD Group’s Russia foodservice business. “Russians like novelties and discovering new tastes. Anything in English has a special aura and in some ways is perceived somehow better than local brands.”

Atlanta-based Focus Brands International’s first entry into Russia was with its Cinnabon brand in 2009, and in only five years, it has expanded its unit count there to 118.

“We see Russia as a very strategic market; there’s wide acceptance with lots of opportunities for growth,” says Mike Shattuck, president of Focus Brands International.

Shattuck acknowledges that there are some challenges to operating in Russia, like bureaucracy, legalization of documents by a foreign government, navigating the supply chain, and dealing with higher rent.

The first McDonald’s opened in Moscow in 1991, after the fall of the Soviet Union, and while the Golden Arches has nearly 300 Russia locations, Bertoch says, the country is still far from saturation. Subway has close to 200 restaurants, Burger King has 22, and Wendy’s plans to bring its total to 180 by 2020, according to each brand’s website.

The political environment in Russia, which has become especially rocky after the nation’s annexation of the Crimean region of Ukraine, doesn’t seem to be affecting quick-serve operators.

“We have successfully navigated internal politics by relying heavily on our local master franchise partners. They have the contacts and networks that make that possible,” Shattuck says. “We continuously monitor the situation in hopes we will stay ahead of the curve and plan appropriate actions to keep our business partners and associates safe.”