Russia Proves Too Chili for Wendy’s

Russia

Russians may soon be asking,“Where’s the beef?”  The beef will not be at Wendy’s, as doing business in Russia has proven too “chili” for the American fast-food chain. Wendy’s officials announced the immediate closure of four of the chain’s stores, and the remaining four will be closed over the next three weeks.

Wendy’s, the third largest U.S. hamburger chain, made the decision after what it terms a lack of enthusiasm by Wenrus, the Russian operator of Wendy’s in Russia. When entering the Russian market three years ago, Wenrus promised to build 180 to 200 franchises within a decade. Today, there are only eight Wendy’s in the largest country in the world.

Competition counts, and there are plenty of fast food competitors in a mega city like Moscow. Hungry consumers can choose from American fast food outlets like Dunkin’ Donuts, KFC, McDonald’s, or Pizza Hut, to name a few. Russian fast food choices from RusBurger to Teremok (thin pancakes) to Kroshka-Kartoshka (the name translates as “little potato”) are just as varied, and equally delicious.

Wendy’s chose to locate their flagship location on Moscow’s popular Old Arbat Street, a pedestrian thoroughfare brimming with souvenir shops, art kiosks, and trendy cafes. Exiting the Moscow metro at the Arbatskaya station, one can stroll a city block and see Subway, another American fast food outlet, located on the left. A few steps later, on the right, and not far from the home of Alexander Pushkin, leads to 16 Old Arbat St., building 2—the flagship of Wendy’s in Moscow.

Russia Old Arbat Street is a major tourist attraction, and if Russia has proven too “chili” for Wendy’s to succeed, location was not the issue. Russians and tourists alike enjoy walking along picturesque Old Arbat street, but despite the prime location, Wendy’s is seldom crowded. Every day, hungry office workers leave their nearby work places to stand in line at Subway, wait patiently at Starbucks, or slowly inch forward at Sbarro for a slice of pizza. Just down the street, Johnny Rockets is always rocking, Stardogs (Nathan’s hot dogs) never slows, and Russian eateries like My-My (pronounced as “Moo-Moo”), and RusBurger stores are always busy.

In spite of brisk business at nearby competitors on Old Arbat, at Wendy’s there is usually an empty table, or more. Empty seats at any restaurant, but especially a fast food café, represent a serious problem. Russians who eat at Wendy’s say that the food is not the problem. The Классик трипл, Классик дабл, Классик сингле (classic triple, classic double, classic single) are tasty, so Wendy’s management decided to take a closer look at Wenrus, their Russian management company.

Wendy’s spokeperson, Bob Bertini, told Bloomberg news that “Unfortunately, the new leadership of Wenrus has not expressed interest in growing the Wendy’s business in Russia….” Bertini also told Bloomberg that Wenrus seemed to lack the resources to increase sales at existing locations, and that does not bode well with Wendy’s executives back home.

Did the Russian fast food market prove too “chili” for Wendy’s? Bertini insists that the decision to pull out of Russia has nothing to do with politics. He even hinted that the chain would someday return.

By Jim Hanemaayer

Sources:
The Wire
Russia Today
LA Times

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