McDonald’s Continues Expanding Ukraine Chain

KIEV, Ukraine -- International fast-food giant McDonald’s has announced plans to expand its stronghold on the Ukrainian market, adding four new restaurants to its 57-chain presence in the country.

McDonald's on Kiev's Independence Square

McDonald’s, the first international fast-food chain to have established a strong presence in Ukraine, opened three new restaurants last year. About $7 million will be invested into the four new restaurants.

While McDonald’s restaurants in the United States and many other countries are typically operated as franchises owned by private investors, the fast-food world leader has invested its own money to conquer Ukraine.

Its advance into the country in the early 1990s spread the fast-food culture into Ukraine. Its arrival catalyzed the birth of a handful of Ukrainian owned fast-food chains such as Shvydko, which offers Ukrainian dishes as well as American-styled French fries.

Mykhaylo Shuranov, a spokesperson at McDonald’s Ukraine, said new restaurants are planed this year for Kyiv, Kryvy Rih, Odessa and Kharkiv. Funds will also be invested into revamping existing restaurants.

Undisputed leader

McDonald, the leading world fast food chain, currently has a presence in 16 Ukrainian cities. Twenty-two restaurants are strategically located in Ukraine’s bustling capital city, Kyiv.

Other renowned fast-food operators such as Kentucky-based Yum! Inc., owner of the Kentucky Fried Chicken, Pizza Hut and Taco Bell chains, procrastinated in entering Ukraine, preferring to focus on bigger markets such as Asia.

As a result, McDonald’s, which has the muscle to conquer all prospective markets simultaneously, has gobbled up control over the Ukrainian fast-food market.

“I don’t think international fast-food chains would be able to compete with McDonald’s [on the Ukrainian market] any time soon,” said Olga Nasonova, owner of Kyiv-based Restaurant Consulting.

We are more likely to see foreign competitors inching in slowly, “establishing several representative restaurants rather than a big network,” she added.

Shuranov doesn’t expect any serious competition either, adding that McDonald’s is the leader on the market by a long shot.

Yet rumors abound that other fast-food chains are eager to enter the market soon to challenge the position of McDonalds. Insiders have said Rosinter, a Russian firm that operates Rostiks, a fast-food chain in Ukraine and Russia mirroring Kentucky Fried Chicken, has inked an agreement with Yum! Inc. that will soon bring Ukraine its first KFC brand restaurants.

Growing competition is also sprouting up from locally-founded fast-food chains such as Mister Snack, which is financially backed by American and European investors.

The first Mister Snack outlet opened in the center of Kyiv in 1997. At present, Mister Snack has 12 restaurants in the capital. Taras Ostapenko, the company’s general director, said Mister Snack is interested in developing its business and is planning to have 20 places in Kyiv by 2009.

Upstream advantage

McDonald’s, however, is not banking on expansion alone. Suppliers for the fast food giant have in recent years launched production on Ukrainian turf, cutting down on costly imports of meat patties and buns.

United States-based OSI, the major meat supplier for McDonald’s internationally, last year launched cattle-raising operations in Kyiv Region intended to provide McDonald’s with its first meat-producing farm for its operation in Ukraine.

The start-up of the Dulitske cattle farm follows an earlier move by OSI to make inroads in the Ukrainian meat production market.

The company began grinding out beef patties for McDonald’s in May 2003 at Vinnytsya Region’s Kozyatyn Poultry Plant, its first Ukrainian meat-processing line, via its Ukrainian subsidiary Eska Food Solutions.

Eska Food Solutions now supplies McDonald’s with all of its beef needs in Ukraine. Plans envision more domestic production of food products for McDonald’s being established in the near future.

Source: Kyiv Post