U.S. fast food giant McDonald's Corp. announced on Friday that it has signed a deal to with a Russian franchisee to that would allow the company to establish a presence in the Siberian region.
Reuters reported that Russian company GiD Llc. has become McDonald's second franchise in Russia and will open 20 restaurants in the Novosibirsk, Tomsk, Kemerovo, and Altai regions in coming years.
Citing a statement by McDonald's Russia Chief Executive Khamzat Khasbulatov, Reuters reported that the company believes the move will continue to bolster its presence in the country. However, Kahsbulatov told Reuters in January that McDonald's plans to slow down its Russian expansion this year due to a challenging business environment.
The Wall Street Journal noted that the deal comes as Russia's economy is declining due to Western sanctions over Ukraine and falling prices of oil, the country's main export. It added that consumer spending is also on the retreat as inflation creeps up from the ruble's plunge.
Last year, McDonald's also encountered pressure from the Russian government, which ordered food safety inspections on 200 stores of the burger chain. The crackdown, which came during the height of the tensions between the West and Russia over the annexation of Crimea, was then seen as part of the effort by the Kremlin to exert pressure on Western companies operating in Russia.
Reuter said reported that the burger chain has over 500 restaurants that employs 37,00 in 120 Russian cities and serves more than a million customers daily. The report noted that McDonald's only started to franchise in Russia three years ago, preferring to operate its own restaurants in most of its 25 years there.
A Bloomberg report last year said McDonald's Russian operations contributed $2.2 billion of the company's $28 billion in sales last year based on the estimates of market research group Euromonitor.
