Potential Return of McDonald's to Russia Under Discussion

In Russia, negotiations are underway regarding the conditions for the return of Western companies that exited the country in 2022. Among these discussions is the iconic fast-food chain, McDonald's, which had previously closed its doors in the wake of geopolitical tensions following the invasion of Ukraine.

The closure marked a significant moment as the familiar golden arches disappeared from the Russian landscape, replaced by a local chain named 'Wkusno i totschka,' meaning 'Tasty and That's It.' This transition was part of a broader trend where numerous Western businesses halted operations in Russia due to the conflict. The Kremlin saw this as an opportunity, promoting the narrative that sanctions could be advantageous for the national economy.

In a swift move, McDonald's sold its outlets to Alexander Gowor, a businessman from Kemerovo, who made his fortune in coal mining and oil processing. Reports indicated that the sale included a clause allowing McDonald's to repurchase its restaurants until 2037. Currently, Wkusno i totschka operates over 920 locations across 65 regions, employing approximately 64,000 individuals.

Similar transitions occurred in the food service sector, with Starbucks being rebranded as Stars Coffee under the ownership of rapper Timati and his business partner. Speculations suggest that the buyback price for Starbucks could be around $270 million. KFC also rebranded to Rostic's, evoking nostalgia for many Russians who remember the brand from the 1990s.

Recently, McDonald's applied for trademark re-registration with Rospatent, Russia's patent and trademark agency, leading to speculation about a potential return to the Russian market. However, representatives from McDonald's clarified that this move was a standard procedure aimed at preventing other entities from using their brand.

These rumors gained traction as various companies, including Chanel and Hyundai, also renewed their trademarks. The Swedish retailer IKEA serves as a notable example of the complexities involved. After its withdrawal, Russian chains Gud Lakk and Belarusian Swed House entered the market, and Yandex Market acquired the remaining IKEA inventory for approximately 12.9 billion rubles (around 138 million euros) until a Moscow court deemed the deal unlawful last May.

As of April, the Association of Furniture and Wood Processing Industry (AMDPR) urged the Ministry of Industry and Trade to impose protective tariffs on furniture imports from 'unfriendly' countries, specifically targeting Germany and Italy, which rank among Russia's top import sources.

For foreign companies considering a return to Russia, the path is fraught with challenges. In March, President Vladimir Putin stated that companies whose markets have been occupied by Russian entities would find it difficult to re-enter. The Russian government is currently drafting a list of conditions for businesses wishing to return, including stipulations that they must have paid their employees prior to their exit and have no outstanding debts, particularly in taxes. A controversial criterion requires that companies should not have financially supported the Ukrainian military or any foreign agents.

Furthermore, there are questions regarding the interest of the Russian elite in welcoming back foreign businesses. The takeover of Danone's assets by the Kadyrov family indicates that Russia's wealthy individuals are securing new lucrative revenue streams.

Reports from early 2024 suggested that Gowor was merely a front for Arsen Kanokow, a wealthy businessman and senator with a history in the North Caucasus. He has allegedly been involved in various similar transactions, including those concerning Starbucks and KFC, alongside the sale of the German hardware chain Obi.