FT: Russian Companies Including "Fake McDonald's" Lobby Putin to Block Return of Western Firms

Russian Companies Thrive Amid Absence of Western Firms
Call for Nullification of Foreign Companies' 'Buyback' Clauses
Putin Reassures Businesses as Russian Parliament Proposes Related Legislation

President Vladimir Putin of Russia. Photo by AP

The Financial Times (FT) reported on June 11 (local time) that Russian companies, which have thrived in the absence of Western corporations?much like the "Russian version of McDonald's" that filled the void left by the fast-food giant during the war?have asked President Vladimir Putin to prevent foreign companies from returning to the market.

Oleg Paroev, CEO of the Russian burger chain "Vkusno i Tochka," stated during a televised "Kremlin meeting" at the end of last month that if the brand (McDonald's) returns, all of his company's information technology (IT) systems and kitchen equipment would be foreign-made.

He added that the vast efforts of his colleagues and Russian partners would ultimately be rendered meaningless to some extent.

President Putin reassured Paroev and other executives who raised similar concerns by saying that he had already instructed the government to find a solution to invalidate the "buyback" clauses. He made a joke, referencing the saying, "Only cowards pay their debts," and added, "This time is no different."

In fact, it is reported that just before the meeting, the Russian parliament submitted a bill that would allow contracts signed with Western companies after the start of the war to be disregarded if the pre-agreed buyback price is lower than the current asset value.

Vkusno i Tochka was founded by Alexander Govor, who had previously been a McDonald's franchisee in Russia. The brand acquired 15 McDonald's outlets and reopened them on June 12, 2022, coinciding with Russia's national holiday. As proposed by President Putin, it also sells the "Big Hit," a burger closely resembling McDonald's signature "Big Mac," reportedly serving 200 customers per day. In 2024, the company's annual sales reached 187 billion rubles, 2.5 times higher than the 75 billion rubles recorded in 2021 before the Russia-Ukraine war.

With Western companies, including those from the United States, leaving Russia, the economic legacy they left behind has been inherited directly by Russian firms. Chernogolovka, a food company that acquired Kellogg's snack division and Heinz's baby food division, saw its sales in the first quarter of 2024 increase by 29% compared to the previous year. In addition, FT reported that more than 300 IT companies have sent an open letter to the government, urging protective measures for domestic firms in anticipation of a possible return of Western competitors.

Commenting on the situation, FT noted, "These 'fake' brands have benefited from increased consumer demand in a market with reduced competition, and now they hope to maintain this structure."