Kremlin's new neighbor Moscow's 2nd McDonald's Fast-food chain defies odds, naysayers, harrowing inflation

June 02, 1993|By Kathy Lally | Kathy Lally,Moscow Bureau

MOSCOW -- They ate nearly 11 million Big Macs and hungered for more. So yesterday, feeding Russia's seemingly insatiable appetite for all things American, McDonald's opened its second Moscow restaurant.

This new McDonald's -- practically in the shadow of the Kremlin and certainly close enough for President Boris N. Yeltsin to stroll over for a quick lunch -- was as full of glowing words as golden fries (462,267 orders served every month).

"Take a look at it," said George A. Cohon, vice chairman of Moscow McDonald's. "It's magnificent."

Bright yellow balloons formed two-story-high arches; the sidewalk was packed with Muscovites waiting, at 10 in the morning, to bite into a hamburger. Photographers who normally snap tourists in front of St. Basil's or Lenin's Tomb had shifted to McDonald's for their backdrop.

World's busiest restaurant

McDonald's is, indeed, a grand spectacle. The first one, about a quarter-mile up the street, was opened Jan. 31, 1990, and quickly became the world's busiest restaurant (40,000 to 50,000 customers every day).

Though rising prices and low incomes have largely eliminated the perpetual line of hundreds of people of the first two years, the first restaurant still swirls with crowds, and it's always hard to find a seat (700 of them).

Russians from out of town come to gawk at one of the wonders of Moscow, Muscovites come to celebrate special occasions and foreigners come with visiting aunts in tow -- the sheer size and numbers are as awe-inspiring as Red Square (50 million customers since the doors opened).

"I came to celebrate payday," said Gennady Zaharyev, a 55-year-old director of a private enterprise, who ate lunch yesterday at McDonald's. "This is the second time in my life I've been to McDonald's. The prices are high, but the food is delicious."

'Like I've gone abroad'

Sixteen-year-old Denis Sarayev was celebrating a friend's birthday. "Here," he said, "I feel like I've gone abroad. They treat us respectfully, and it's very clean."

All the superlatives, said Mr. Cohon, mean one simple thing: "Success is possible in Russia."

Mr. Cohon, senior chairman of McDonald's Restaurants of Canada, said everyone had told him business success here was impossible before he opened the first restaurant nearly three and a half years ago.

"First, people said we'd never make the deal. Well, we made the deal," he said -- entering into a joint venture with the Moscow city government. The city got a 51 percent share in exchange for the land, and McDonald's Canada holds 49 percent.

"They said we'd never get supplies. Now 98 percent comes from within the country," he said. McDonald's opened its own food processing center, McComplex, in suburban Moscow, where it can produce 3,000 liters of milk, 14,000 buns and 5,000 apple pies every hour.

"They said you'll never get good employees. Well, I asked, 'Who wins the Olympics? Who gets the most gold medals?' If they can win the Olympics, we can teach them to make hamburgers, smile and say 'Thank you, please come again.' "

The first restaurant now has a beaming crew of 1,560, and the new one has 500.

The new restaurant is on the first floor of a gleaming 80,000-square-foot, 12-story glass office tower, built with a $15 million investment from McDonald's to generate hard-currency profits. The rent -- from tenants such as Coca-Cola, American Express, Upjohn and Toyota -- is paid in dollars.

The restaurants charge rubles, a source of pride to Mr. Cohon and a rarity in Moscow, where most things worth eating cost dollars -- lots of dollars.

When he began doing business here, the big question was what would he possibly do with ruble profits. Rubles were not convertible. He decided to invest them -- rubles helped build the new restaurant and completely built a third one that is to open July 3 in Moscow.

Now, rubles can be freely converted into dollars or other hard currency. But Mr. Cohon said the strategy remains to invest in more restaurants here. Up to 20 are planned.

In its relatively short time here, McDonald's has become an interesting barometer of change in the former Soviet Union. It offers a harrowing picture of inflation. When McDonald's opened in January 1990, a Big Mac cost 3.75 rubles. Yesterday, it cost 1,110 rubles.

"That's up 300 times," said Mr. Cohon. "But when we opened, a kilogram of beef (2.2 pounds) cost 1 ruble 95 kopecks. Now it costs 1,000 rubles for that same kilo of beef. That's up 500 times."

For a Russian -- with an average monthly income of 24,000 rubles -- it's a fortune. For an American, it's the cheapest in the world -- $1 at yesterday's exchange rate.

How to eat a Big Mac

Interesting anthropological observations can be made at McDonald's. It turns out, for example, that human beings are not born knowing how to eat a Big Mac.

Some Russians disassemble the three-tiered Big Mac and eat it in sections. Others roll each section into neat, blini-like tubes. The bravest simply grab the whole thing as best they can and start eating.

Marc A. Winer, general director of Moscow McDonald's, said there is indeed one correct way to eat a Big Mac. "With enjoyment," he declared.

When the next restaurant opens in July, he said, the three restaurants will serve as much food as 25 McDonald's in a city like Baltimore.

"There will be thousands and thousands of customers," he said, and even more Cokes (407,291 now served every month).

Somehow, they make it look easy. But nothing is easy in Moscow. Earlier this month, another hamburger operation opened.

It's called Burger Queen and is U.S.-based. The other day the burgers tasted pretty good, except for one harrowing reminder that this is Moscow, where the details will kill you.

On top of each hamburger, nestled between bun and sauce, sat two slices of . . . cucumber.

Cucumber!

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