McDonald's will expand by 45 outlets in Russia by the end of this year, CEO Jim Skinner said Monday as the company marked the 20th anniversary of the opening of the first landmark restaurant under Soviet rule in 1990.
The expansion, bringing the number of McDonald's in Russia to 290, comes as rival Burger King arrives in Russia.
"Russia is doing so well, we have chosen Russia as one of the top countries for re-investment of capital in 2010," CEO Jim Skinner told reporters.
Skinner dismissed suggestions that the recent market entry of Burger King Holdings Inc., operator of the No. 2 hamburger chain, could hurt the company.
"Every new competitor and opportunity to serve the Russian customers is a challenge for us to do a better job, to be more relevant," Skinner said.
McDonald's Corp., based in Oak Brook, Illinois, posted a $1.2 billion profit in the fourth quarter 2009, 23 percent more than a year earlier, as the company continues to tackle the downturn better than most of its competitors.
Skinner was visiting Moscow to celebrate the 20th anniversary of McDonald's entry into the Soviet Union, which was then opening up to the capitalist West.
The first outlet in the country opened on Moscow's Pushkin Square on Jan. 31, 1990, after 14 years of negotiations.
The Pushkin Square McDonald's held anniversary celebrations on Sunday with Russian folk songs and a buy-one, get-one free deal on burgers.
The 1990 opening attracted thousands of Russians who stood in long lines at the restaurant that officials say is still the busiest in the world and took 27,000 applications for 600 jobs.
The company, the world's No. 1 fast-food company with 32,000 restaurants in 120 countries, is now in 60 Russian cities, serving more than 900,000 customers every day and employing 25,000 people, and plans to spend $135 million this year on its expansion.
Retail sales in Russia fell by 5.5 percent by volume in 2009, and hundreds of restaurants and cafes fell victim to the downturn.
McDonald's in Russia is, however, thriving and opening in Russian regional cities where other foreign fast food chains are rare.
George Cohon, former head of McDonald's Canada, began negotiations with Soviet officials at the height of the Cold War in 1976.
"Others have said that we were pioneers, we were the doves of perestroika," he said, suggesting the company played its part in dismantling the Iron Curtain.
"I think to a certain extent all of that is true. When we came in, it was a bit of a breakthrough not only for McDonald's but for others in the way they looked at the former Soviet Union."
Khamzat Khasbulatov, the first manager of the Pushkin Square McDonald's, conceded that there was an apprehension when it opened that it could become a high-profile victim of the volatile transition economy. That was quickly overcome, he said.
"When we signed a deal with the Moscow government, we said we'd open 20 stores in the city — now we have 100 and we still need more," said Khasbulatov, now president of McDonald's Russia and Eastern Europe.
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