International fast food will have more challenges than others to withdraw operations in Russia
Following calls from international brands to pull out of Russia due to its invasion of Ukraine;
Ramsey Baghdadi, Consumer Analyst at GlobalData, a leading data and analytics company, offers his view:
“McDonald’s and other fast food outlets are under pressure to withdraw from the Russian market however, this is easier said than done for the fast food industry. Russia represents approximately 0.7% of the global fast food restaurant’s value in 2020. Such a small proportion of value generation in Russia tells us that fears of losing sales is not the main factor at play here.
“The challenge that foodservice providers have is the very nature of their business model. Fast food chains such as McDonald’s and KFC often have complicated agreements with their outlets, as a large proportion of them are franchises and are not enterprises. So, it becomes a much more challenging negotiation to completely stop operations compared to other industries.
“However, as 72%* of consumer purchases are driven by a brand’s ethics or support shown toward a social cause, it becomes difficult for these companies to balance consumer expectations and their operational needs, putting pressure on international fast food restaurants.”
* GlobalData’s 2022 Q1 Global Consumer Survey, March 2022, ‘Essential’ and ‘Nice to have’ responses combined, 22,727 respondents
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