McDonald’s Plans To Close More Branches than It Opens In Russia
Fast food restaurant chains expect to open no more than 50-60 restaurants this year, compared to more than 70 last year.It looks like McDonald Corporation’s (NYSE:MCD) turnaround plan, in terms of negative net store openings, will not be limited to the US alone. The company is also contemplating of doing the same in Russia too. According to Russian manager, Alexei Semenov, the fast food chain plans to open no more than between 50 to 60 restaurant stores this year, compared to more than 70 that it opened last year.
Last week, the company announced that it would shut down more stores in the US, in response to many millennials rejecting fast food chains for more niche eating establishments, due to poor service and lengthy menu.
That translates into around $120 million of investment planned for this year, down from the $200 million that was committed in terms of hard currency due to the lower strength of the dollar. Officials and experts say that the cuts in spending are a result of growing pressure from the Russian authorities last year, following the annexation of Crimea, which lead the fast food company to shut its doors in the region last year.
In response the country’s sanitary body, Rospotrebnadzor, conducted a series of inspections in the fast food chains in various regions of Russia, resulting in the closure of at least 12 branches temporarily. The chain has also received a negative publicity in the media, which is supported by officials and public persons.
Economic sanctions that had been applied are affecting the overall slowdown in the Russian economy, as well as changing consumer perceptions and rising inflation, making many basic goods out of reach for ordinary Russian consumers.
In that process, the company has reported a single digit growth and not the double digit that it had been hoping. While McDonald’s is not the only food chain, suffering from the problems that are affecting the entire Russian food industry, the other problems mentioned earlier are only exasperating the problem.
Company representatives stated that the branches, which were closed temporarily, are now operating as normal, but proving that McDonald’s is not so welcoming in the country anymore. The International Affairs Committee of Russian State Duma, Alexey Pushkiv, has called on the fast food giant to leave the market to join other companies who are fleeing from the sanctions that is being imposed upon the state. The company is recommended to keep strategies align to avoid any problems.
McDonald’s stock price ended the day at $95.98, a loss of 0.20% from the previous week.
Last week, the company announced that it would shut down more stores in the US, in response to many millennials rejecting fast food chains for more niche eating establishments, due to poor service and lengthy menu.
That translates into around $120 million of investment planned for this year, down from the $200 million that was committed in terms of hard currency due to the lower strength of the dollar. Officials and experts say that the cuts in spending are a result of growing pressure from the Russian authorities last year, following the annexation of Crimea, which lead the fast food company to shut its doors in the region last year.
In response the country’s sanitary body, Rospotrebnadzor, conducted a series of inspections in the fast food chains in various regions of Russia, resulting in the closure of at least 12 branches temporarily. The chain has also received a negative publicity in the media, which is supported by officials and public persons.
Economic sanctions that had been applied are affecting the overall slowdown in the Russian economy, as well as changing consumer perceptions and rising inflation, making many basic goods out of reach for ordinary Russian consumers.
In that process, the company has reported a single digit growth and not the double digit that it had been hoping. While McDonald’s is not the only food chain, suffering from the problems that are affecting the entire Russian food industry, the other problems mentioned earlier are only exasperating the problem.
Company representatives stated that the branches, which were closed temporarily, are now operating as normal, but proving that McDonald’s is not so welcoming in the country anymore. The International Affairs Committee of Russian State Duma, Alexey Pushkiv, has called on the fast food giant to leave the market to join other companies who are fleeing from the sanctions that is being imposed upon the state. The company is recommended to keep strategies align to avoid any problems.
McDonald’s stock price ended the day at $95.98, a loss of 0.20% from the previous week.
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