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McDonald’s Is Making a Big Push in Russia This Year

January 25, 2016, 3:15 PM UTC
A burger set is displayed at a McDonald's restaurant in Hong Kong in this photo illustration
A burger set is displayed at a McDonald's restaurant in Hong Kong in this photo illustration taken July 31, 2014. Around two-thirds of the more than five dozen consumers Reuters reporters spoke to in Shanghai, Beijing and Hong Kong on Thursday said they would scale back their visits to McDonald's, at least for now. Diners in Hong Kong also said they were likely to eat less frequently at McDonald's, but noted that the chain's low prices made it hard to give up. REUTERS/Bobby Yip (CHINA - Tags: HEALTH BUSINESS FOOD) - RTR40T5R
Photograph by Bobby Yip — Reuters

McDonald’s (MCD) plans to open more than 60 restaurants in Russia in 2016, increasing the pace of expansion from last year, after its focus on local suppliers and affordable menus has proved successful in an economic crisis.

“The eating-out industry has been stagnating since the beginning of 2015 but we have seen significant growth of our market share as we continued expansion,” Khamzat Khasbulatov, chief executive of McDonald’s Russia, told a news conference.

He said the company had to make “serious adjustments” to its business model after sanctions and the weakening of the rouble put pressure on its margins.

“The development of local supply has played a big role in supporting our profitability,” he said on Monday.

In 2016, capital spending will focus on modernization and further investment in local supply as well as new openings.

The U.S. fast-food chain, which has been present in Russia for 26 years, has steadily increased the share of local supply to 85%.

Khasbulatov said the company hoped to achieve full localization, helping smooth out the impact of currency swings and Russia’s food import ban.

“It’s important to localize not only food processing but also production,” he said.

“In terms of capital allocation, Russia remains an interesting region … within the (McDonald’s) system,” he told reporters.

“The foundation that we’ve built allows us to look in the future with a big optimism … and to prepare for even more intense development.”

McDonalds opened 59 restaurants in Russia in 2015. Khasbulatov said the company had been raising prices below broader inflation and would continue with this strategy to remain competitive.