HEADWINDS
Govor has said he plans to expand the new brand, which has yet to be named, to 1,000 locations across the country and reopen all the chain’s restaurants within two months. But there may be some headwinds.
It takes decades to build a brand, said Peter Gabrielsson, 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 is the first time consumers can really feel and touch and see the brand and what it stands for,” he said. “It’s important what the reaction will be and obviously people will be comparing it to McDonald’s.”
McDonald’s, the world’s largest burger chain, had owned 84 per cent of its nearly 850 restaurants across Russia and it took a charge of up to US$1.4 billion following the sale to Govor, whose GiD LLC had previously run 25 restaurants.
Oleg Paroev of McDonald’s Russia has 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 has said it will retain its trademarks.
McDonald’s last year generated about 9 per cent, or US$2 billion, of its revenue from Russia and Ukraine.
McDonald’s has the right to buy its Russia restaurants back within 15 years, but many terms of the sale to Govor remain unclear.
The TASS news agency said on Wednesday McDonald’s would stay open as usual at airports and train stations in Moscow and St Petersburg until 2023, quoting a source close to Rosinter Restaurants, another franchisee.
“Rosinter has a unique agreement under which the American corporation cannot take the franchise away. They can operate in peace,” TASS quoted the source as saying.
Rosinter declined to comment. McDonald’s did not immediately respond.
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