Networks competed with consumers – Kommersant

Most of the major foreign fast food brands that continue to operate in Russia, as well as the Vkusno — i Tochka chain, which replaced the departed McDonald’s, expectedly reduced their revenue in 2022. The exception was McDonald’s longtime international competitor, Burger King, which increased its cash flow by 40% and more than doubled its profits. This network, unlike other Western companies, did not close its establishments for a while, which allowed it to attract some buyers.

As the Casebook service calculated at the request of “Kommersant” based on the reporting of companies, Burger King became one of the Western fast food chains in Russia that showed the best financial results in 2022. The company’s revenue increased by 40% year-on-year to RUB 69 billion. This brand in Russia is being developed under a master franchise by Burger Rus LLC, a joint company of Burger King Europe, the owner of the Shokoladnitsa chain, Alexander Kolobov, and VTB Capital. The company declined to comment.

Another large network, McDonald’s, closed 727 out of 850 facilities in the Russian Federation a year ago, having sold the local business at the same time to Kuzbass businessman Alexander Govor. In June, he opened his own fast food restaurants on the site of 200 American brand locations. “Delicious – period”managed by Sistema PBO LLC. The revenue of this company, according to Casebook estimates, at the end of 2022 amounted to 73.5 billion rubles, which is 43% less than in 2021 McDonald’s gained.

Revenue KFC managed by Unirest LLC decreased by 6% year-on-year to RUB 17 billion, pizzeria chains papa john’s (LLC “4 Papas”) – nine times, up to 115.5 million rubles, Pizza Hut (LLC “Noy-M”) – by 12%, up to 322 million rubles.

In terms of gross margin growth, Burger King also outperformed its competitors in 2022. According to Casebook estimates, the chain managed to increase this figure by 135% year-on-year, to RUB 14 billion. At KFC, the increase was 9%, up to 11 billion rubles.

Burger King is one of the few international fast food chains that did not even temporarily close its establishments last year in Russia due to a geopolitical conflict, Anna Rozhdestvenskaya, an expert at Franshiza.ru, explains the results of the company’s work.

This, in her opinion, allowed the company to pull customers from restaurants of other brands that froze work on the Russian market.

At the same time, according to Casebook, KFC’s net profit for the year amounted to 1 billion rubles, Burger King – 2.5 billion rubles. KFC would have had a higher figure, but the chain had to close 70 establishments owned by the brand owner: only franchised outlets remained open.

Gross profit of the Papa John’s pizzeria chain fell by 83% last year, to 103.5 million rubles, and after taxes, the network’s net loss amounted to 77 million rubles. At Pizza Hut, gross profit decreased by 72%, to 74 million rubles, net profit amounted to 31.5 million rubles. Papa John’s pizzerias underwent a number of changes in 2022 related to operational and marketing support in Russia by the parent company, said Irina Blagoveshchenskaya, Vice President for Financial Affairs of the Federation of Restaurateurs and Hoteliers. In Pizza Hut establishments, she continues, there was also a change of operator and rebranding. Papa John’s and Pizza Hut did not respond to Kommersant’s request.

In 2022, many networks have adjusted their work based on the international situation. They made a decision whether to leave the Russian market completely or find partners to whom they could transfer the business, Anna Rozhdestvenskaya states.

This also affected the business of some chains. Thus, Vkusno-i Tochka had a gross profit of only 211 million rubles, which is 100 times less than McDonald’s had in 2021. At the same time, according to Casebook, due to a significant drop in revenue and an increase in the cost of sales, the chain received a net loss of 11 billion rubles.

In Vkusno — i dot, they explained to Kommersant that the chain had invested a lot in opening restaurants, promoting a new brand, and restarting the delivery service. In addition, the network assumed the obligations of McDonald’s to employees and suppliers, wrote off branded products produced, the company says. They note that in the first quarter of 2023, financial results have already turned out to be higher year-on-year, adding that it is more correct to compare the figures for March this year with 2021 in March, when the network’s establishments were opened.

KFC said that Unirest’s figures do not reflect the work of the entire restaurant chain, the vast majority of which operates under franchising agreements and consists of separate legal entities. In addition, they added, 2022 was not quite a standard year for the fast food market, so it is “not entirely correct” to evaluate indicators for this period.

Daria Andrianova, Anatoly Kostyrev