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Popularity of Fast Food Growing in Russia

29 November 2014

USDA Foreign Agricultural Service

The fast food sector in Russia has grown sharply in recent years and has grown by nearly 30 per cent in value in 2013.

Russian consumers demand well-known, affordable, and consistent quality standards provided by chained restaurants and today almost 100 fast food operators manage almost 3,800 chain restaurants in Russia according to the USDA Foreign Agricultural Service.

Fast food is the most popular segment for young and middle-aged Russian consumers and research has shown that more than 54 per cent of fast food restaurants visitors are from 18 to 34 years old with average monthly income of 30,000 rubles.

While the economic slowdown and currency devaluation are slowing down fast food expansion plans in Russia, research has shown that consumers are switching from higher end restaurants to mid-level and fast food type establishments, which should help fast food chains weather the challenging economic times.

The strong growth is caused, in large part, to the growing overall popularity of franchising in Russia, making it one of the main tools of fast food business development.

This reflects Russian customers’ preference for well-known and consistent foodservice standards provided by the chained segment – a fact which is confirmed by outlet growth as well.

According to Euromonitor International, the number of independent fast food outlets grew only marginally in 2013 while chained fast food outlets increasing by 15 per cent. Approximately100 fast food operators manage almost 3,800 chain restaurants in Russia.

The Russian economy has cooled significantly and is forecast to grow by just 0.2 percent in 2014, according to the International Monetary Fund.

At the same time, the Russian Ruble has devaluated by 41 per cent in 2014 while inflation is expected to reach nine per cent by the end of the year.

Russia’s economic difficulties intensified in early November as the Ruble crashed flamed fears that the country may be on the verge of a full-blown currency crisis reminiscent of the 1990’s.

The Ruble has fallen steadily in recent months amid rising tensions with the west, but it took a dramatic downward plunging more than 10 per cent over a two-day period in early November surpassing 48 Rubles per $1US.

This makes the cost of imported goods and products used in Russia’s fast food sector more expensive which gets passed on to the consumers.

Year-on-year inflation hit eight per cent in September, driven up by the declining value of the Ruble and Russia's ban on many food products from the United States and European Union, according to data from Russian Federal Statistics Service (Rosstat).

Rising food prices were the main driver, climbing 11.4 per cent year-on-year in September, up from a 10.3 per cent increase year-on-year in August.

While overall food prices have only risen slightly, spikes have been seen in prices for specific commodities such as meat, fish, and seafood - the same products hit by Russia's retaliatory ban in August.

The price of meat and poultry rose 16.8 per cent year-on-year in September, fish by 14.1 per cent, and dairy products by 16.2 per cent.

While the economic slowdown and currency devaluation are slowing down fast food expansion in Russia, research has shown that Russians are switching from higher end restaurants to mid-level and fast food type establishments which should help fast food chains weather the challenging times ahead.

russian fast food chart
Fast Food Formats in Russia
Type Leading Brands
Burger and
sandwich
Subway, McDonald’s, Burger King, Carl’s Jr., Stardog!s
Chicken KFC, Southern Fried Chicken
Ice cream 33 Penguins, Baskin Robbins, Tutti Fruitti Frozen Yougurt
Pizza Sbarro, Papa John’s, Pizza Hut, Domino’s Pizza, Tashir pizza, Dodo pizza
Potato Kroshka-Kartoshka
Blini Teremok, Chaynaya lozhka
Bakery Cinnabon, Dunkin’ Donuts, Wetzel’s Pretzels, Krispy Kreme, Magnolia Bakery, Auntie Anne’s
  • Source: Fast Food Market research

Further Reading

You can view the full report by clicking here.

 

November 2014

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