28th International Food Exhibition
24–27 September 2019 • Crocus Expo, Moscow, Russia

Russia’s fast food market: resilient & robust

News
Fast food seemingly reaches all around the globe and Russia is no stranger to its instant-fix pleasures and tastes. Since McDonald’s first erected its famous golden arches in Moscow back in 1990, Russia’s appetite for low-cost, convenient food has exploded.
Russia’s fast food market: resilient & robust

One of Russia’s most resilient food service sectors

Fast food, thanks to its low prices, wide spread availability and product variety, is one of Russia’s most recession-resilient food and beverage industries. Indeed, sale volumes have risen defiantly undeterred by the rouble’s devaluation and the nation’s subsequent economic troubles.

Given fast food’s major market presence, it is no surprise to see its value share increase in the face of Russian financial turmoil. In 2011, before recession really hit Russia, fast food held a 47% value share of total consumer food service sales. This figure rose to 54% in 2015.

Data provided by the United States Department of Agriculture states that the majority consumers of convenience food in Russia are aged between 18-34 year olds with an income of 30,000 roubles a month (approximately $500). This may explain fast food’s rising popularity: its core consumer base are young and active, but budget-conscious enough to prefer more affordable choices when dining out or on the move.

Fast food in Russia is open to foreign business

It seems like the nation is a magnet for international fast food chains. Beyond McDonalds, which plans to open 50 new Russian restaurants across 2017, a bevy of mostly US franchises compete across Russia’s food service landscape.

Major foreign operators include Subway, with just over 600 stores — rivalling McDonald’s 609 outlets — alongside Burger King in the burger/sandwich sector. KFC dominates the fried chicken segment of the market, with over 550 stores throughout Russia and the CIS. Elsewhere, Papa John’s and Sbarro are the leading lights of Russia’s pizza sector.

According to data from Euromonitor, McDonald’s unsurprisingly holds the largest individual market share, in terms of value. Moskva-McDonald’s, the LLC in charge of the American brand’s Russian operations, holds a 20% market share of a market worth in excess of $10 billion.

KFC recently saw its Russian sales peak at just shy of $2 billion too, showing American franchises rule the roost when it comes to Russia’s fast food preferences.

Domestic convenience food chains still prominent

Prior to McDonald’s unveiling of its first Moscow store, Russian fast food mainly comprised of local delicacies such as blinis or ice cream. Now, the landscape is a little different. Several Russian chains are able to compete, at least at local levels, with foreign rivals.

Amongst the most popular chains, mostly found in Russia’s two largest cities of St. Petersburg and Moscow, are stuffed potato specialists, brands offering traditional foodstuffs reworked to fit the fast format, and a Russian take on the American hot dog.

Teremok, established in the late nineties, offers Russian delicacies, such as the aforementioned blinis, in a quick-to-eat format. Its popularity is such that it runs over 400 outlets across the country. Behind US-based chains, Teremok is Russia’s fourth largest convenience food establishment.

Korshka Kartoshka (Little Potato) operates over 300 restaurants and cafes throughout Russia, and is subsequently ranked in the top five fast food providers on the Russian market. Apart from offering stuffed potatoes with a wide range of fillings, it secret appears to be its store location strategy.

The majority of Korshka Kartoshka outlets can found in malls and shopping centre food courts. In fact, 75% of all convenience food restaurants in these retail outlets are Russian-owned chains.

Rounding out the top three Russian fast food chains is Stardogs. Founded in 1992 by Russian businessman and importer of Danish meat products, Sergey Shikharev, the brand’s kiosks have become a familiar sight in Moscow and beyond. It now operates 702 branches in sixteen Russian regions. Stardogs’ main offering is American-style hotdogs (i.e. a grilled sausage in a bun, topped off with onions and condiments).

It should also be pointed out that McDonald’s Russia could be considered a purely Russian operation. Moskva-McDonald’s has operated independently of its American parent company for over 22 years. In early 2017, the brand announced it was to source up to 85% of its ingredients from Russian suppliers by 2020. However, this seems to be a policy employed by McDonald’s in many of its major markets.

Fast food marches on in Russia

With hints of Russia’s economic recovery revealing themselves, it is likely fast food will continue to enjoy a dominant market share in the food service sector. With sales rising annually, it appears this is one avenue for expansion in Russia; either supplying the existing chains or by setting up franchises/operations.