Russia Plans Home Grown Alternatives To Food Joints Like McDonald’s Corporation (NYSE:MCD)

Russia is preparing its national syndicate of restaurants that are set to rival Western food giants like McDonald’s Corporation (NYSE:MCD), KFC and Subway. Russia will invest almost $19 million into the restaurant project initiated by Nikita Mikhalkov.

Technical analyst have identified strong buy signals in MCD.

Nikita Mikhalkov, an Oscar-winning director, met Russian deputy prime minister Arkady Dvorkovich on Thursday and got a state-backed loan for 70% of the investment needed to kick-start the restaurant project.

The project, known as, “Let’s eat at home” is touted as a patriotic project and is intended to replace western fast food chains and create national alternatives. Mikhalkov has also asked for help from Russian President Vladimir Putin for the project.

The project has a network of forty-one restaurants and ninety-one food stands and will use local products which are set to bolster Russian agriculture, according to the letter sent to Putin by Mikhalkov. The letter further added that one-third of the menu will feature local specialities. Mikhalkov won Oscar in 1995 for his movie “Burnt by the Sun” and is a supporter of Putin.

After the collapse of USSR, many Western fast food chains entered the Russian market to tap into the demand. Though local chains have established a stronghold, yet foreign chains are widespread in the country.

The project, however, has its detractors. The former finance minister of Russia Alexei Kudrin has stated that the fast food project could harm small and medium-sized businesses. Russia banned many food imports from the West in response to the sanctions imposed on it by the West over the crisis in Ukraine. McDonald’s Corporation (NYSE:MCD) is one of the companies that have taken a hit due to sanctions.

Russia’s consumer watchdog agency closed the flagship restaurant of McDonald’s along with several other outlets in Russia. The reason given for the shutdown was sanitary conditions. However it is widely believed that political considerations were the main reason for the crackdown.

Brown Terrel

Brown Terrel

Terrel is US Markets Daily's business news reporter. She joined US Markets Daily after five years as a print reporter.