The Reason There Are Fewer Russian McDonald’s

Changing its name from Oyster Bar to No Oyster Bar, an upscale Moscow restaurant switched from Parisian snails to Russian blini and beetroot soup. The reason is the Russian embargo of food from nations protesting its Ukraine policy.

With the embargo eliminating imports, local Russian producers are benefitting. Edam and gouda, previously from Europe, now have more Russian producers. At an agricultural fair, homegrown moose meat was offered as an alternative to prosciutto.

The only complaints (otherwise patriotism reigned) that I could discover were about McDonald’s. Shown in the following map, McDonald’s is closing some of its 437 restaurants. The reason is overzealous Russian sanitary law regulation that materialized after the embargo began.

For the McDonald’s map below…

• Numbers over the markers indicate how many have closed.
• Yellow: closed for an upgrade or renovation
• Red: closed
• Orange: legal violations

From: Vox

McDonald’s (Russian) 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. For the restaurant’s 600+ jobs, more than 20,000 people applied. 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.

From The Calvert Journal:

“Once inside we were blown away by the number of young cashiers behind the huge counter, smiling, moving like bees, serving one meal after another. Nothing like our fat old ladies in white gowns sitting in front of empty shelves, pyramids of dusty canned food as window dressing. In our excitement, we ordered one of everything, super size, like everyone around us. My mum probably spent our monthly savings on it. I still remember how insanely huge the milkshake looked and I didn’t know how to hold a Big Mac with my tiny hands — I was nine years old at the time — so it landed on the ground after the first bite. A tear rolled down my cheek and my mum stormed off for a new burger.”

The opening day queue:

On January 31, 1990, the first Russian McDonald’s opened in Pushkin Square. Twenty-four years later it was “temporarily” shuttered.

Our Bottom Line: Comparative Advantage

During the early 19th century, economist David Ricardo explained that trade optimized efficiency. Instead of doing all they are good at, countries should identify their comparative advantage and then make the good or service for which they sacrifice less than someone else gives up. The same would be true for Derek Jeter. Even if Jeter is the best at baseball and mowing his lawn, he should only play baseball. Someone else who sacrifices less can do the lawn.