The world's most famous fast food chain McDonald's is closing the doors of its 850 restaurants in Russia. It was the first and largest chain in the country. That also means a blow to the potato sector. How does the country get its chips now?
After the Russian invasion of Ukraine, McDonald's decisively closed its 850 restaurants. This made it one of the first major Western companies to take such a radical decision, just like Heineken. Today, May 16, the chain makes known definitively not to return to the Russian market. According to a statement, the current humanitarian crisis in Ukraine is causing this. The fact that the future in the country is uncertain is also a factor.
Restaurants under the Russian flag
It is a weighty decision for 'the big yellow M'. Russia accounts for 9% of sales and 3% of operating profit. In 1990, McDonald's was the first chain to open a restaurant in Moscow. Most of the branches are owned by the American company. This is in contrast to Burger King and Kentucky Fried Chicken (KFC). An attempt is now being made to find one buyer. The franchisees have sometimes opened on their own since March. The buildings will be cleared of the well-known yellow arches and other features. McDonald's itself speaks of 'de-arching'. The brand will remain registered in Russia.
One possibility is that the fast food chain is nationalized. French car manufacturer Renault recently sold its shares to Russian government agencies, such as a science institute and the city of Moscow. The government speaks of a first step in nationalizing foreign companies since the invasion.
French fries production has come to a standstill
McDonald's presence in Russia has also attracted French fries manufacturers since the 90s: McCain Foods and Lamb Weston Meijer. Both have factories in the country and supply fries from Europe to Russia. The Canadian McCain announced in mid-March that it would stop building its new factory in Tula Oblast, three hours south of Moscow. The company also no longer supplies fries from other countries. A lot of product was also supplied to Russia from Poland. Not only by McCain, but also by Farm Frites/Aviko.
Another player is Lamb Weston Meijer. LWM Rus and Belaya Dacha built one together extension from their factory in Lipetsk Oblast. The processing capacity will be more than doubled by an investment of €145 million. The second production line should be completed next year, the plan was last June. Company stopped in March, both construction and French fries export as well as local production.
More exports?
Even when fries are served again from the old restaurants, the question is where those fries come from. The country hardly has sufficient production. In 2021, the import of frozen fries increased sharply, partly due to the easing of the corona pandemic and the reopening of the catering sector. It is 40% more volume. Good for more than 100.000 tons. Given the great need, the country will not quickly close its borders to importing potato products.
It is up to the exporters whether they want to supply the country or not. For the time being, potato products are not subject to sanctions. Exports were also high in the first two months of the year. These are the only periods for which figures are known. In February, exports of frozen potato products to Russia were 64% higher than a year earlier. Over a period of twelve months that is over 50% more.