McDonald's on defensive in Russian fastfood fight

More than two decades after McDonald’s Corp. (MCD)’s outlet on Moscow’s Pushkin Square began offering a golden-arched alternative to grey communist eateries, the fast-food pioneer is on the defensive.

McDonald’s, which virtually created the market for burgers and fries in the country and convinced Russians it’s OK to eat with their hands, must fend off a growing challenge from rivals Burger King Worldwide Inc. (BKW), Subway Restaurants, Yum! Brands Inc. (YUM) and Wendy’s Co. (WEN).

To fend off rivals, McDonald’s this year will turn to franchising, a model it uses in more than 80 percent of its outlets worldwide but has shied from in Russia. The company has chosen OAO Rosinter Restaurant Holding, which runs local chains Il Patio and Planet Sushi as well as foreign franchises such as T.G.I. Friday’s, to operate outlets in airports and train stations. McDonald’s also plans to work with franchisees for a push into Siberia and other far-flung areas.

“Russia is a priority market for McDonald’s,” said Khamzat Khasbulatov, who heads the company’s operations in the country. “And franchisees will play a significant role in our success.”