What We Can Learn From the Russian McDonald’s Replacement

Vkusno & tochka has applied for a trademark in Kazakhstan. Translated as “tasty and that’s it,” Vkusno & tochka is the new name for the Russian McDonald’s. McDonald’s had to leave Kazakhstan because it lost its Russian beef patty suppliers.

The Vkusno & tochka logo has two yellow fries and an orange burger:

Where are we going? To two economic systems.

The Russian McDonald’s

After McDonald’s pulled out of Russia because of the Ukraine invasion, 15 of its restaurants reopened on June 14, 2022. Its new owner, Alexander Nikolaevich Govor, said that he plans to add to the 850 that had existed. Reflecting the chain’s rebranding, its new menu will offer a Big Mac replacement called “The Big Hit,”  It will have a new sauce, a different ingredient :layout,” and a revised “composition.”

Mr. Govor told Reuters that he could not use the McDonald’s name, the golden arches, nor its colors. Since Coca-Cola pulled out of Russia, the soft drink selection had to change. Then, during August, the fries left the menu in some restaurants because of a bad harvest and their importing limitations. Furthermore, Mashed reported moldy buns and sauce packets.

Some History

In 1990, just after Gorbachev and perestroika, McDonald’s arrived at Pushkin Square. The Russian economy had a competent defense sector but the production and distribution of consumer goods and services was a disaster. With perestroika, a restructuring had begun that McDonald’s could boost.

Opened as a joint venture between McDonald’s Canada and the Russian government, the restaurant exclusively used local suppliers and accepted only rubles. McComplex, the processing plant they built, had a “meat production line, dairy, potato processing plant, bakery, garnish line, pie line, liquid products line, quality control laboratory, and distribution unit.” It could produce one million buns a week, 127,470 cheese slices, and equally large amounts of its other ingredients. Also, McDonald’s built and equipped with modern communications a 12-story office building in Moscow that far exceeded the technological status quo. More than 20,000 people applied.for the restaurant’s 600+ jobs, Smiling at customers was one of the skills employees learned.

Charging 3 rubles and 75 kopeks for a Big Mac (approximately one-third of a typical daily Soviet wage), they served 30,567 people on opening day.

Our Bottom Line: The Market and Command

We could say that McDonald’s brought “a taste of the market” to Russia.

McDonald’s in Russia is a story that started with a command economy, continued with a bit of the market, and now appears to have returned to command. One of the three basic kinds of economic systems, command (or central planning) is a system that depnds on one group or person making the decisions. They answer what will be produced. They decide how, and they allocate the income. With a market, many millions of individuals and businesses make production and distribution decisions. Their incentivers come from supply and demand. While command is from the top down, the market is bottom-up. (Tradition is the third basic system.)

We can ask now if McDonald’s replacement takes us back to the limits of decision making in a command economy.

My sources and more: The beginning of the McDonald’s Russia story was told by Reuters. It continued with an August, 2022 update at Mashed and CNN and Insider. Then, here and here, we have more recent facts. (Our 1990s history came from a past econlife post.)