The Russian Hotel Restaurant and Institutional (HRI)sector has returned to its pre-crisis growth. HRI sales grew by a healthy 15 percent in 2011, on par with pre-crisis sales growth of 10to12 percent
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: RSATO1217
Food Service - Hotel Restaurant Institutional
HRI Food Service Sector
The Russian Hotel Restaurant and Institutional (HRI) sector has returned to its pre-crisis growth. HRI
sales grew by a healthy 15 percent in 2011, on par with pre-crisis sales growth of 10 to 12 percent (2005
to 2008). Returning consumer confidence has brought customers back into HRI dining establishments.
Most notably the HRI sector’s growth is in the fast food, coffee shop, and casual-dining segments. Since
imports make up the vast majority of HRI products (more than 65 percent), opportunities for U.S.
products are significant. Market opportunities for U.S. products include red meats, poultry, fish and
seafood products, rice, tree nuts, fresh and dried fruits, and cheese. Russia officially joined the WTO in
August 2012 and committed to reducing and binding import tariffs on all agricultural goods, thereby
providing more predictability to the trading relationship and opening export opportunities for the U.S.
The Russian Hotel Restaurant and Institutional (HRI) sector has returned to its pre-crisis growth. HRI
sales grew by a healthy 15 percent in 2011, on par with pre-crisis sales growth of 10 to 12 percent (2005
to 2008). Returning consumer confidence brought customers back HRI dining establishments. Most
notably the HRI sector’s growth was in the fast food, coffee shop, and casual-dining segments. Since
imports make up the vast majority of HRI products (more than 65 percent), opportunities for U.S.
products are significant.
Russian consumer markets offer many opportunities for American producers as domestic
competitiveness is still low. There are significant opportunities for U.S. companies to benefit from this
growth, as many importers, distributors, and managers in the HRI sector have expressed an interest in
buying marbled meat, cheesecakes, sauces, wine, spirits, cheese, seafood, tree nuts, high-quality
ingredients, and other products. The majority of HRI customers are price sensitive, but they are
nonetheless interested in reliable suppliers of quality products and new and innovative products.
To succeed, American exporters must be prepared to do extensive marketing and to educate potential
buyers on how to use their products. American products also face substantial competition from Western
Europe, Asia, and South America. Logistics may be a challenge, especially as to the Russian regions.
While the main markets for American products are still in Moscow and St. Petersburg, the HRI sector is
rapidly developing in other large cities. These include Nizhniy Novgorod, Yekaterinburg, Kazan,
Novosibirsk, Samara, Ufa, and tourist cities on the Black Sea such as Sochi, the site of the 2014
Olympic Games. Operating outside major regions, however, adds an additional layer of logistical
complication for American exporters. To overcome these difficulties, they will need to collaborate with
strong importers or distributors.
SECTION I: MARKET SUMMARY
Before the economic crisis in autumn 2008, Russia had one of the fastest growing economies in the
world. Rising incomes in the 2000s boosted consumer optimism and spending on non-essential goods
and services. The real GDP growth rate was 8.1 percent in 2007, but in 2011 real GDP growth was
lower at 4.3 percent albeit still positive due to high oil prices which are the main drivers of the Russian
Table 1: Russia: Social and Economical key figures
2007 2008 2009 2010 2011 forecast
Population, million. 142.1 142 141.9 141.9 142.96 143
Unemployment, % of labor
force 4.3 6.4 8.4 7.5 6.1 5.7
Average monthly salary per
person, RUR 13593 17290 18638 20952 23693 25233
Real GDP growth, % change
y-o-y 8.1 5.6 -7.9 4.0 4.3 3.5
Inflation, % 11.9 13.3 8.8 8.8 6.6 6.5
Exchange rate (per $1) 25.58 24.85 31.76 30.36 29.35 31.09
Source: Federal State Statistics Bureau (Rosstat)
Russia is the ninth most populous country in the world, with almost 143 million people. However, the
Russian population has been declining in numbers since 1995. European Russia, geographically west of
the Urals, hosts over 75% of the total population, although it accounts for only 25% of the country's
territory. According to Rosstat, 73% of all Russians lived in urban areas in 2010 and over 10% of the
total population lived in Moscow (11.5 million people) and St. Petersburg (4.8 million people). Beyond
the two largest Russian cities there are ten cities (Novosibirsk, Nizhniy Novgorod, Yekaterinburg,
Samara, Omsk, Kazan, Ufa, Chelyabinsk, Rostov-on-Don,Volgograd) with a population of more than
one million people.
The unemployment rate of the economically active population had declined to 4.3 percent in 2007, but
soared to 8.4 percent in 2009. That situation has turned around somewhat with unemployment down to
6.1 percent (3.6 million unemployed) in 2011. In addition, individuals' real incomes in 2011, increased
by 13% compared to 2010 and real income is forecast to increase by 6.4% in 2012.
Consumer markets are flourishing in Moscow and St. Petersburg as the incomes of their residents grow.
As a result, Moscow and St. Petersburg are Russia’s largest restaurant cities with market shares of 15 %
in Moscow and 5.6 % in St. Petersburg in 2011. This growth comes despite the higher rate of increase in
the cost of food, which increased faster than overall inflation in 2011. According to the State Statistics
Service’s data, inflation in Russia in 2011 was 6.6% while food prices increased by 10.7%.
In 2011 the average exchange rate was 29:1 and at the middle of 2012 it reached a yearly maximum of
32.9:1. Although the Ruble is recovering, it is still weak against the Dollar and Euro, so imported food
prices have risen respectively and have impacted imports moderately.
Figure 1. Russia’s Central Bank’s exchange rate of $1 USD to Ruble and $1 Euro to Ruble from
January to December 2012
Source: Central Bank of Russian Federation
Moscow and St. Petersburg remain the leaders in HRI concentration and growth as well as the industry
trend-setters. HRI sales grew by a respectable 15 percent in 2011, on par with pre-crisis sales growth of
10 to 12 percent (2005 to 2008) and are estimated to have grown by 13% in 2012. Returning consumer
confidence brought back Russians’ pre-crisis eating-out habits. Fast food outlets, casual restaurants, and
coffee houses are the most popular and fastest-growing sectors in Russia.
Table 2. Food Service Industry Sales in Russia
2007 2008 2009 2010 2011
RUR, billion 643.8 723 711.2 779.5 896.6
Growth Year on Year, % 12.3 -1.7 9.6 15
US Dollars, billion 25.26 29.10 22.42 25.57 30.54
Average annual exchange rate 25.49 24.84 31.72 30.48 29.35
Source: Federal State Statistics Bureau (Rosstat)
After some consolidation in the industry during the crisis years (2008-2010), in 2011-2012 more and
more local as well as international chains are active in the Russian foodservice market and are planning
further regional expansion. Currently the largest cities in Russia, Moscow and St. Petersburg, account
for 41% and 15% respectively in terms of chain outlets on the overall consumer foodservice market.
High operational costs in Moscow and St. Petersburg, and the fact that the foodservice market in both
cities is highly saturated, are forcing the main players to consider regional expansion in order to sustain
their share. The foodservice market in the regions of Russia is still relatively underdeveloped and has
strong potential for further growth.
Franchising has become a very popular tool for multinational players in Russia. Franchising offers an
easier way for investors to enter the Russian market with a lower level of investment, since the materials
required for the setting up of outlets and apparatus are often included as part of the franchise agreement,
cutting expenses and bringing about profits more quickly.
Major Restaurant Operators in Russia
The number of cafes, restaurants, and other food outlets in Russia currently stands at about 88,000.
According to FoodService magazine there are currently more than 370 restaurant chains operating in
Russia, each of which manages between 3 - 560 outlets. According to Euromonitor research the total
number of restaurant chains currently is about 10,500 outlets. McDonald’s, Subway, Rosinter Restaurant
Holding, Arkadiy Novikov Restaurants, Ginza project, Markon, Coffee House , and Shokoladnitsa are
the largest restaurant chains in different foodservice segments in Russia.
The Russian restaurant market can be broken down into the following segments:
Fine-Dining/Full-Service Restaurants: higher priced/exclusive outlets;
Casual-Dining Restaurants: affordable, family dining outlets;
Quick and Casual Restaurants, which include coffee shops
Fast-food/Quick Service Restaurant (QSR), which is divided into two separate segments:
Stationary fast-food and street/mobile fast food (kiosks, stalls, etc.)
Three main segments of the market stand out clearly. The highest-priced segment, “fine-dining” in
Western terminology, has an average check of more than $70 per person. Patrons receive refined
cuisine, unique design, good service, and the availability of private dining space. The medium-priced or
casual segment has an average check of $20 to $70 per person, and it includes chains such as Il Patio,
Yolki-Palki, Goodman, and Planet Sushi. The lowest-priced segment, fast-food, mainly consists of
chains such as McDonald’s, Subway, Rostik’s-KFC, and Kroshka-Kartoshka.
In 2011, the consumer foodservice market recorded 15% growth in current value terms. The fastest
growing channels were fast food and cafés/bars, both rising by 17% in current value terms. Full-service
restaurants, which were the most negatively affected by the economic crunch, demonstrated stronger
growth compared with the previous year, reaching 6% in 2011. Nonetheless, consumers still considered
dining in full-service restaurants as a less essential activity due to the fact that these outlets usually have
higher average prices compared with fast food establishments or cafés/bars, and they remained budget-
conscious when dining in such outlets.
Table 3. Russia: Consumer Foodservice by Independent versus Chain Outlets (2011)
Outlets Independent Chained Total % of Total
Fast-food 16,722 5,320 22,042 25
Street stalls/kiosks 11,170 1,603 12,773 14.5
Cafés/bars 9,171 1,214 10,385 11.8
Full-service restaurants 5,859 1,325 7,184 8.1
Pizza consumer foodservice 3,026 878 3,904 4.4
Self-service cafeterias 31,094 80 31,174 35.4
100% home delivery/takeaway 534 168 702 0.8
TOTAL 77,576 10,588 88,164 100
Source: Official statistics, trade associations, trade press, company research, trade interviews, and
Euromonitor International estimates
Table 4 shows foodservice chain leaders in 2012, their brands, types, and number of outlets.
Table 4. Russia: Leading foodservice chains
Holding # outlets % change # outlets in Brands Type
company in Russia 2011/2010 Moscow
Markon 561 18.1 386 Stardog!s, Bageteria, Street +
Rosinter 382 4.9 197 Il Patio, Planet Sushi, Casual
Kroshka- 292 4.3 224 Kroshka-Kartoshka Street +
McDonald’s 323 16.2 95 McDonald’s, McCafe QSR
Coffee House 233 4 135 Coffee House, Asia, QSR
Shokoladnitsa 349 26.4 215 Shokoladnitsa, Vabi Sabi QSR
Teremok 202 5.8 99 Teremok, Bitte Gril Street
Yum!Brands 182 11 86 KFC QSR
Novikov 76 2.7 74 Different concept Fine
Group restaurants +casual
BRPI 258 19.4 53 Baskin Robins QSR
Subway 408 78.2 152 Subway QSR
Eurasia 143 16.3 2 Eurasia Casual
Ginza Project 84 -10.6 50 Yaposha-30 in Moscow Fine +
and different concept casual
Cinnabon 90 94 15 QSR
Chaynaya 66 3.1 0 Chaynaya lozhka QSR
Burger King 55 200 Burger King QSR
Starbucks 64 22 43 Starbucks QSR
RP-Com 30 0 29 Goodman, Kolbasoff, Casual
Total 3452 5% 1857
Source: FoodService magazine, trade press
Rosinter Restaurants Holding (Rosinter) is a major player on the Russian restaurant market. The
company gained its leadership role by its early deployment of chain restaurants in the casual-dining
segment of the market where Rosinter held 9% of the market in 2011, or 382 outlets in 44 cities in
Russia, the CIS, Central Europe, and the Baltic states. In 2011, the company opened 42 new restaurants
including 17 corporate and 25 franchised. By year-end the total number of franchise stores reached 127,
which constituted over 33% of the network. In 2012, the casual dining chain grew more modestly to 386
restaurants with the net addition of 2 corporate and 5 franchised outlets during 3Q 2012. Rosinter’s
consolidated net revenue increased by 3.6% compared with 9 months of 2011 and stood at 7.86 million
The company offers Italian, Japanese, American, and Russian cuisine under its proprietary brands (Il
Patio, Planet Sushi, and 1-2-3 Café) and its licensed brands (T.G.I. Friday’s and Sibirskaya Korona). In
addition, Rosinter is developing the Costa Coffee chain with Whitbread PLC.
Table 5. Rosinter restaurant brands
Brand name Type First year of operation # # outlets
in Russia outlets, 2011
Planet Sushi Casual (Asian) 1999 110 129
Il Patio Casual (Italian) 1993 114 139
(rebranding in) 2005
T.G.I. Friday’s Casual (American) 1997 24 30
American Bar & Casual (American) 4 4
Sibirskaya Casual (beer- 17 19
1-2-3 Café Casual (Russian) 2007 21
Costa Coffee Coffee house 2008 26
Other countries 14
Total 270 382
Source: Rosinter web-site
Table 6. Rosinter Consolidated Revenues in 2007-2011
2007 2008 2009 2010 2011
RUR, billion 6.73 8.36 8.34 9.17 10.34
Growth Year on Year, % 24.2 -0.3 9.9 12.8
US Dollars, million 264 336.55 262.93 300.85 352.30
Average annual exchange rate 25.49 24.84 31.72 30.48 29.35
Source: Rosinter data
Rosinter has three main development objectives. The first is to accelerate the expansion of its coverage
in Russia, the CIS, and Europe. The second is to increase its presence in transportation facilities, trade
centers, and Moscow residential areas. The third is to develop new formats of its brands for high-traffic
In April 2012, McDonald’s Corp. gave the Rosinter Restaurants Holding the first franchise to open the
U.S. brand’s fast-food restaurants in Russia. (McDonalds has been operating in Russia since 1990,
please see below.) Rosinter received rights under an agreement through April 2023 to operate
McDonald’s restaurants in Moscow’s three international airports and St. Petersburg’s Pulkovo airport.
Rosinter will also be able to open the stores in a number of Moscow and St. Petersburg railroad stations.
McDonald’s, the largest chain of fast-food restaurants in the world, entered Russia in 1990 and opened
its first restaurant in the center of Moscow. As of December 31, 2011 McDonald’s had 323 restaurants,
including 43 McCafes, operating throughout Russia and serving more than 1 million customers daily.
There are 95 McDonald’s restaurants in Moscow. The company operates in 60 Russian cities. On
McDonalds’s 20th anniversary in Russia in January 2010, company reported about serving 2 billion
McDonald’s announced plans to open 45 new outlets in 2012 with active expansion in the region of
Siberia. It not only plans to open new outlets in Novosibirsk, Tomsk, Omsk and Barnaul, but is also
considering opening a logistical centre in the region.
Until this year, McDonald's had been expanding in Russia through self-operated stores only. In April
2012, McDonald’s gave one of Russia's largest multi-concept restaurant operators, Rosinter Restaurant
Holding, the subsidiary right to develop the chain in railway stations and airports in Moscow and St.
McDonald’s operates in 120 countries and Russia is one of the ten top countries by sales volume.
McDonald’s growth rate in Russia is between 20 to 30 percent annually. The fast-food giant opens about
40 new restaurants in Russia every year. The company spends between $1.5 million to $2 million to set
up each new restaurant. Opening one cafe costs about $250,000.
McDonald’s also plans to expand its McCafe chain, its premium class coffeehouse format. The first
McCafe opened in Russia in 2002 and now there are 47, most of which are in Moscow and in St.
Petersburg. McCafe also operates in Yaroslavl, Nizhniy Novgorod, Yekaterinburg, Volgograd, Kazan,
The corporation also owns the McComplex, the Moscow-based food processing and distribution centre,
which supplies the fast food giant in Russia and the CIS. It has invested $45 million in the McComplex.
McDonald’s currently supplies 80% of its needs from 130 local companies. Since February 2010, when
Inalca JBS opened a new meat production and distribution facility near Moscow, JBS’ partner Marr
Russia supplies frozen hamburgers to McDonald's restaurants.
Baskin Robbins, the world's largest chain of ice cream specialty shops, entered Russia in 1990. In 1996,
the company opened a major ice cream plant in Moscow -- the biggest in Europe -- able to churn out
16,500 tons annually. The company sells more than 125 flavors of premium ice cream. In 2010, the
company expanded its assortment range and increased the number of prepackaged ice-cream products
offered at its outlets. Turnover at the Baskin Robbins cafe chain in Russia climbed 12% year-on-year in
2011 to 739.8 million rubles. Baskin Robbins Production International opened 69 new ice cream salons
in Russia in 2011, expanding its chain 40% to 242, most of them franchises. The company is represented
in 82 regions. The most new outlets were opened in Moscow, which has 52 cafes. There are 11 cafes in
St. Petersburg. The largest Baskin Robbins ice cream cafe in Europe opened in Moscow's Novy Arbat in
Arkadiy Novikov Restaurant Group (Novikov Group) includes nearly 76 restaurant-retail-
entertainment projects of various formats and price ranges. The company has launched and managed
restaurants since 1992 and has continued to place second in full-service restaurants. The Novikov Group
is slightly less chain-oriented. It operates more than 74 different Moscow high-end concept restaurants,
along with a five casual-dining restaurant chains such as, Malenkaya Yaponiya, Sushi Vesla, Prime Star,
and Kish-Mish. It also operates the premium grocery chain Globus Gourmet, the Russian branch of the
French gourmet chain Hediard, the greenhouse complex OOO Agronom, and the Premium Class
catering business. Novikov has also branched out internationally and has a restaurant in London named
Novikov Restaurant and Bar.
RP-Com (Restaurant Professional Company) is one of the top 10 foodservice operators in Moscow. RP-
Com currently owns the following restaurants in Moscow: eleven Goodman steakhouses (also with
branches in London, Zurich and Kiev), four Filimonova & Yankel fish-houses, eight Kolbasoff beer-
restaurants, and three Italian Mamina Pasta restaurants. While RP-Com is not the leader in any one
foodservice format, the company’s future growth seems promising because it has built a reputation on
quality and service. During its eight years of foodservice experience, the company has gained success in
the niche of North American full-service restaurants. This type of restaurant is less developed in Russia,
and currently only a few independent operators specialize in grill menus. The Goodman chain became
the third largest chain of North American full-service restaurants in Moscow as well as in the whole of
RP-Com belongs to the Food Service Capital Group of companies which also includes "Comfis"
prepared food factory, "Legion" food provider, Saint Petersburg prepared rations factory and food
service company providing passenger meals for Sapsan high-speed trains.
Ginza Project is one of the largest and the most dynamically developing consumer foodservice
businesses in Russia. The company operates various restaurants and entertainment venues with different
formats and price segments, although there is a bias towards various fine dining options. The restaurant
holding Ginza Project began developing a nationwide network of Yaposha cafés in 2003. Since 2008,
Ginza Project has continued to invest heavily in its expansion. In 2007 there were 22 Yaposha outlets in
total, with this number rising to 50 by the end of 2009. Besides regional development of the Yaposha
chain, the group doubled the number of its themed restaurants in Moscow. As of December 2012, the
company operates 84 outlets, including 50 restaurants in Moscow.
Haute cuisine appeared in Russia in the mid 1990’s, and there is no shortage of high-end restaurants
with extravagantly expensive checks at meal’s end in Moscow and St. Petersburg. Fine-dining
restaurants are associated with names such as Arkadiy Novikov, Andrey Delos, and Ginza Project, but
most experts agree that the top-category restaurant sector is saturated. Restaurateurs are moving toward
casual restaurants where tables turn over more quickly and profit margins are higher. Nevertheless, there
is still an opportunity for U.S. products in the fine dining segment because consumers are loyal to high-
quality imported products such as marbled beef, seafood, high-end wines, and spirits.
The leading position in this segment belongs to the chain operators, including those specializing in
Russian, North American, Italian, and Asian cuisines. The poor development of independent operators
across most full-service restaurant formats means it is heavily concentrated with chains, especially in
Moscow and St. Petersburg. Independent restaurants face strengthening competition from cafés, bars,
and fast-food outlets, which provide good quality food at lower prices. Russian consumers prefer a
diverse menu at affordable prices. The average price for a meal at one of these restaurants ranges from
$20 to $70 per person.
Although meat dishes are a staple of almost every Russian restaurant, North American–style steakhouses
are not yet widespread, accounting for only 3 to 4 percent of the Moscow market. Experts attribute this
to the fact that opening a steakhouse cost 15 to 20% more than opening the average restaurant, due to the
need for special grilling equipment and a downtown location to attract a profitable number of customers.
Rent is significantly higher in the city center than in the suburbs. Another added expense is the
marketing and education necessary to promote steakhouse culture. Currently, the main American-cuisine
restaurants in Moscow are the American Bar & Grill chains (operated by Rosinter), Chicago Prime,
eleven Goodman steakhouses (operated by RP-Com), Louisiana Steakhouse, and six Torro Grill
restaurants. Even though the number of steakhouses is growing, overall consumption of steaks is
increasing steadily. These restaurants use imported meat, usually from Australia or the U.S., since local
suppliers do not provide consistent quality. In 2012 there has been a big interest in using American
marbled beef at steakhouse restaurants which is a trend we expect to continue as long as Russian trade
requirements do not interfere with the import of U.S. beef.
Several years ago Chili's Bar & Grill entered the Russian market. This American restaurant chain is
owned by the restaurant holding company Brinker, which opened the first Chili’s in Moscow on
February 1, 2011. The network in Russia will be developed by a local franchise partner company called
Trio Group. According to the franchise agreement, which was signed in August 2009, the Trio Group
shall open 25 restaurants in Russia by 2017. Chili's Bar & Grill is the main rival of the American chain
T.G.I. Friday's, which operates in the Russian restaurant market through the holding Rosinter.
The enormous popularity of Japanese cuisine made Asian full-service restaurant chains the most
ubiquitous category of casual restaurants. Japanese restaurants, with sushi and fish menus, are heavily
represented among fish and seafood-concept restaurants in Russia. As Russian consumers become
increasingly health conscious, sushi’s image as a healthy food is an essential component of this growth.
U.S. rice and seafood is used in many Asian restaurants.
Very few casual chain restaurants have a centralized system of purchasing. Most decisions regarding
products and purchasing are made at the restaurant/group level. On the one hand, there are many more
opportunities for sales, since each restaurant is a separate account. On the other hand, individual sales
are smaller and do not allow for the development of exclusive distribution rights and consistent volumes.
According to industry experts, casual eateries use imported meat, seafood, desserts, seasonings, and a
variety of ingredients. While quality is of some concern, prices dominate purchasing decisions.
American products will need to be cost-competitive to attract business in this segment.
Table 7. Brand Shares of American Fast Food Operators in Russia, 2008-2011 (% value)
Global Brand Owner 2008 2009 2010 2011
McDonald's McDonald's Corp 44.8 47.6 45.9 43.3
KFC Yum! Brands Inc 6.3 6.1 6.1 6.1
Subway Doctor's Associates Inc 0.8 1.1 2.2 4.1
Sbarro Sbarro Inc 5.3 4.4 4.4 3.3
Burger King Burger King Holdings Inc - - 1.2 3.3
Teremok Teremok - Russkie Bliny OOO 1.7 1.7 2.0 2.1
Kroshka-Kartoshka Tekhnologiya & Pitanie Ltd 1.7 1.8 1.7 1.6
Baskin-Robbins Dunkin' Brands Inc 0.9 0.9 1.1 1.3
Cinnabon Focus Brands Inc - 0.1 0.3 0.6
Papa John's Papa John's International Inc 0.2 0.3 0.4 0.5
Dunkin' Donuts Dunkin' Brands Inc - - 0.1 0.2
Carl's Jr CKE Restaurants Inc 0.1 0.1 0.1 0.2
Wendy's Wendy's/Arby's Group - - - 0.2
Others Others 39.2 35.9 34.5 33.2
Total Total 100.0 100.0 100.0 100.0
More Russians have started visiting fast-food outlets with average checks of 150-300 Rubles ($5-$10)
on a regular basis. Quick service outlets have captured many new customers who used to eat at casual-
dining or fine-dining restaurants.
In September 2011, U.S. chain KFC in Russia announced the rebranding of 153 stores (81 in Moscow
and 72 in the regions) from Rostik’s- KFC to KFC. Fifty of the 164 restaurants are corporate, and the
rest are franchises. The typical KFC customer is aged 16 to 39, is not afraid to try new things and wants
to see society progress while enjoying a Western dining experience. The average check at local KFCs
amounts to 200 rubles, which is about the same as in the United States.
Fast food in Russia costs on average 30 percent more than in Europe and the United States. The average
check at a Russian fast-food outlet is $8.92 according to research by a Wendy’s Russian franchisee Food
Service Capital group. It is significantly higher than the United States average check of $6.50. A large
pizza at Papa John’s in the company’s home base of Louisville, KY., for example, costs $14, compared
with $21.62 for the same pizza in Moscow.
International franchises include Burger King, Pizza Hut, Baskin-Robbins, Dunkin’ Donuts, KFC and
Subway, with the franchise system are most prevalent in Moscow and St. Petersburg. Most international
fast-food operators, including American chains such as McDonald’s, Burger King, Starbucks, Cinnabon,
Papa John’s, Dunkin’ Donuts, Chili’s and Wendy’s/Arby’s Group, launched their business in Russia
from Moscow. Around 90% of franchising activity takes place in the Russian capital. Only two
foodservice players launched their restaurants in St. Petersburg: Subway and Carl’s Jr.
Pancakes, burgers, chicken, pizza, and baked potatoes are the most popular types of fast-food in Russia.
The food-court format is gaining popularity among fast-food operators. The most dynamic chains --
including Subway, Burger King, KFC, Kroshka-Kartoshka, Sbarro, and Baskin-Robbins -- have opened
numerous outlets in shopping malls and hypermarkets.
Stand-alone kiosks are popular in Russia, but there is some consolidation in the industry. The number of
independent stands is decreasing, but sales and the number of chained outlets are increasing. Domestic
chains dominate the street fast-food market. Chains such as Stardog!s (hot dogs), Krosha-Kartoshka
(potato stand), and Teremok (Russian crepes) are located throughout the major cities and are expanding
regionally as well. Table 8 shows the growth of fast food restaurant chains in Russia.
Table 8. Growth of fast food restaurant chains in Russia
Chai r est. in outlet outlet % change n nam Country of Yeae
origin Russia s s 2011/2010
Kartoshka (Mosc 991 304 292 4.3 ow) 1
Russia 1993 (2003 new
Stardog!s 406 480 18.1
McDonald's USA (Canada) 1990 278 323 16.2
Teremok Russia 1998 191 202 5.5
KFC Russia/U 93 (2005 new SA 19 164 182 11
R USA 1992 173 242 40 obbins
Sbarro USA 1997 104 158 55.2
L 2001 64 66 3.1 ozhka (St.Petersburg)
Subway USA 1994 157 324 106.4
Cinnabon USA 2009 29 60 106.8
Burger King USA 2010 11 33 200
Donuts USA 1996/2010 8 17 112.5
Carl’s Junior USA 2007 11 15 36.4
Papa John’s USA 2004 24 29 20.8
Chili’s Grill &
B USA 2011 2 ar
Source: Restaurateur Magazine, Euromonitor, trade press
By the end of 2011, fast food burger restaurants reported 21% growth in current value sales, and 28%
growth in terms of outlet number. In 2011, Subway managed to outrun McDonald’s in terms of outlets,
not only in Russia but worldwide, making it the number one chain in terms of outlets in the world.
Subway, the world’s largest sandwich chain, is one of the most rapidly developing fast food chains in
Russia. Subway opened 157 new restaurants in Russia in 2011, twice as many as in 2010. As of October
2012, Subway had 442 outlets in all Russian regions, including the Far Eastern Federal District. The
national Subway franchise for Russia is co-owned by three Californians, all of whom originally invested
in the franchise in the early 1990s. Despite the profitability of their first restaurants, a long-running legal
dispute with Russian partners jeopardized the venture in the mid- and late-1990s. With that behind them
and with the impetus toward the QSR format afforded by the financial crisis, Subway has quickly
developed in Russia. In St. Petersburg, the popularity of the Subway brand is underscored by the fact
that, from May to July 2010, one local Subway restaurant had the highest sales turnover out of 31,000
Subway restaurants worldwide. Subway has an ambitious plan of expansion, intending to reach 1,000
stores by 2015.
Since 1997, the Russian company G.M.R. Planet of Hospitality has operated 160 Sbarro restaurants, as a
Fast-food restaurants tend to use a higher percentage of local ingredients (around 50 percent) as
compared to other restaurants. This decision is driven by high turnover and the need for a consistent
supply-chain more than by direct preference. Several fast-food chains have created internal supply-
chains based in Russia. For example, McDonald’s created McComplex to produce nearly 56,000
hamburger patties daily, but McComplex cannot produce enough to meet its needs. The company
therefore buys additional hamburger from meat suppliers. Since the beginning of 2010 Marr Russia
supplies frozen hamburgers to McDonald's, KFC, Burger King, and Carl’s Jr. outlets.
The produce and egg products used by fast food chains are usually sourced locally, but import
opportunities do exist. Many chains use imported sauces and ingredients. Smaller fast-food restaurants
that do not have the capital or scale to justify creating their own production facilities may also import
meat and produce. Poultry and beef are the leading imported meats in this category. Most of the larger
international chains have an internal distribution network, while some independent and smaller chains
rely on traditional or specialty distributors.
Burger King, one of the largest fast food corporations in the world, has established a presence in Russia
by opening its first restaurant in Moscow on January, 2010. Burger King is using its traditional
franchising scheme to expand the chain in Russia. In order to launch operations in Russia, Burger King
has established a daughter company Burger Rus, managed by Alexander Kolobov who has successfully
established a well-known coffee -shop chain called Shokoladnitsa. Under the terms of its franchise
agreement, Shokoladnitsa is required to give 5% of its turnover to Burger King, while Burger King is
obliged to pay for the opening of each restaurant. The company also signed an agreement in February
2011, with Ginza Project, a second franchising partner in Russia.
Burger King currently has 55 restaurants in Russia. In June 2012, Burger King and the fast food giant’s
Russian franchisee Burger Rus established a joint venture with VTB Capital, the investment arm of
Russia’s second biggest lender, to develop and expand the restaurant’s chain and brand presence in the
Burger King outlets in Russia get a significant share of their food from domestic suppliers. The
company has about 30-40 suppliers in Russia, of which more than half are local producers. The
hamburger patties, for example, are being supplied by Russian Inalko. Franchises are required to buy
product only from Burger King-certified suppliers.
Dunkin' Donuts, the U.S. doughnut eatery chain that left Russia after a three-year stint in 1999,
returned to Moscow in 2010 with big plans for rapid expansion. The Russian company Donuts Project
received exclusive franchising rights for development of the chain in Russia and the Ukraine. According
to the company’s plans, the brand will be situated in both street and business centers. Dunkin’ Donuts
opened its first outlet in May 2010 and currently has seventeen restaurants in Moscow. Dunkin’ Donuts
plans to open no less than 50 establishments in Moscow. Dunkin’ Donuts chain offers more substantial
food choices, such as salads and sandwiches, alongside the doughnuts.
Dunkin’ Donuts has ambitious plans to beat competition in the underdeveloped takeaway market
through more convenient packaging and also to inspire a love of doughnuts in young Russians.
Wendy's/Arby's Group, one of the world's leading fast food operators entered the Russian market in
2011 and will open 180 restaurants there over the next 10 years. The company signed a franchising
agreement with Russia's Food Service Capital group, owned by Mikhail Zelman. Food Service Capital
currently has seven outlets in Moscow with average bill $8-9. Regional expansion through sub
franchising will start in 2013.
By opening 27 restaurants in Moscow, in addition to the six in other cities, Papa John’s franchise has
become the third-largest takeout pizza company in the city. It costs about $400,000 to set up a store in
Moscow, which can turn an operating profit in three months. So far, Moscow -- a city of 11.8 million –
only has about 300 pizza restaurants.
U.S. major bakery brand chain Cinnabon opened its first outlet in 2009. In 2011, the brand expanded by
31 outlets reaching 60 establishments at the end of the year, and saw growth of 140% in terms of current
values sales. In 2011, Cinnabon Russia was recognized as the fastest developing chain among all
Cinnabon chains all over the world. As of December 2012, Cinnabon has 90 outlets.
Russia’s fast food market still isn't saturated in spite of the development that has taken place for the past
decade. It’s a very attractive segment not only for existing large players, but also for domestic restaurant
operators and multinational companies alike reaping the benefits. Experts predict that the fast-food and
street-food market will not reach saturation until 2014.
The popularity of coffeehouses among urban consumers in the largest Russian cities is great and
growing. Before the crisis, the coffeehouse business in Russia showed impressive average annual
growth of 136% in value terms. According to InFOLIO Research Group value of the coffee shop
market will reach 6.73 billion rubles in 2012 (14% increase in comparison to 2011).
According to InFOLIO Research Group, currently there are about 5200 coffeehouses in Russia. About
1340 coffee outlets are managed by more than 80 chain operators. Most coffeehouses are concentrated
in Moscow – about 670, and in St. Petersburg - about 470 coffeehouses. In Moscow each third
coffeehouse belongs to Shokoladnitsa and each fifth belongs to Coffee House. There is an increasingly
high concentration of the leading chains, including Shokoladnitsa, Coffee House, Starbucks, McCafé,
and Costa Coffee in these cities, so in the short term many coffeehouse chains plan to expand into the
Russian provinces. Non-chain coffee shops are significantly less common. The rapid development of
modern hypermarkets, trade centers, shopping malls, and business centers is helping leading chains,
more so than independents, to enter regional markets.
The leading coffee-shop chain Shokoladnitsa, which celebrated its 10th anniversary at the beginning of
2011, has already opened outlets not only in Moscow (where there are around 200 establishments under
the brand) and St. Petersburg, but also in Yekaterinburg, Volgograd, Kazan, Kemerovo, Novosibirsk,
Sochi, Rostov-on-Don, Ufa, Tyumen and Chita, as well as abroad: in Yerevan, in Almaty and in three
cities of Ukraine. Moreover, at the moment it focuses on regional expansion to the far eastern region of
Two coffee-shop chains leaders, Shokoladnitsa and Coffee House, together own about 750 outlets and
have value shares of 7% and 5% respectively. Shokoladnitsa is closer to an Italian type of café with a
cozy interior, while Coffee House is a more American-style coffee shop, with the décor being airy and
uncomplicated. As a result, the clientele differs: Coffee House is preferred by consumers under 30,
while Shokoladnitsa is favored by a more mature audience. Most of the Coffee House and Shokoladnitsa
outlets are located in the food courts of new shopping malls and business centers.
Local chains such as Traveler's Coffee in Novosibirsk, Kofeynya No. 7 in Yekaterinburg, and Pit’ cafe
in Rostov-on-Don have strengthened their competitive positions in local markets. Currently the
Traveler’s Coffee brand name is used by about twenty franchises in different Russian cities including
Moscow and St. Petersburg.
In 2007, two leading multinational coffee shop chains appeared on the Russian market, adopting
different development strategies. The world leader, Starbucks Coffee Company, opened its first outlet
in Moscow in September 2007 and currently is number three by coffee sales after Shokoladnitsa and
Coffee House. In December 2012, Starbucks finally opened its first coffeehouse in St. Petersburg and
currently operates 64 coffee shops in Russia, 61 of which are in the capital. Following Starbucks,
Whitbread and Rosinter Restaurants Holding signed a joint-venture agreement and announced their
intention to launch the Costa Coffee chain in Russia. Costa Coffee outlets are not only concentrated in
Moscow and St. Petersburg but also in other Russian regions. The appearance of these leading
multinational coffee chains on the Russian market has changed the position of the coffee shop segment.
Table 9 shows the growth of Russia’s coffee shop chains.
Table 9. Russia: Coffee-Shop Chains
First Number of
Chai Year of outlets n Name Locations Operati 201 201
on 0 1
Shokoladnitsa Moscow, St. Petersburg, regions 2001 225 349
Coffee - House Moscow, St. Petersburg, regions 1999 216 233
Starbucks Moscow 2007 40 53
Tr Novosibirsk, Moscow, St. Petersburg, Siberian 36 48 aveler’s Coffee 1997
McCafe Moscow, St. Petersburg, regions 2002 43 47
Kofe Set Moscow, St. Petersburg 2008 16 42
Coffeeshop 23 29
C Petersburg, Moscow 2008 ompan St. y
Costa Coffee Moscow, St. Petersburg, regions 2007 26 26
Source: Restaurateur Magazine, trade press
The typical Russian coffee shop format differs from Western standards because Russian consumers
prefer a larger assortment of drinks and food items. According to industry sources, coffee accounts for
only 40 percent of those for Coffee House and 15 percent for Shokoladnitsa. Coffee shops in Russia
constantly increase their non-coffee selections to include alcoholic drinks, dairy cocktails, salads, hot
dishes, desserts, and tea. The average bill at one of these coffee shops is between $15 and $25, and
drinks average only 30 to 40 percent of the total check. Russian coffee shops that sell a variety of
desserts and confectionery products have created a new market for U.S. exporters of desserts, nuts and
According to Russia’s State Statistics Bureau (Rosstat), Russia had 5174 functioning hotels able to
accommodate guests in 570,000 rooms at the end of 2011. Almost 20% of hotel rooms are in Moscow,
15% are in Russia’s popular Black Sea resort area Sochi, and 12% are in St. Petersburg.
Russia’s hotel industry is facing a room shortage. GWA Sawyer estimates that there are currently only
40,000 Western business-style hotel rooms available. In fact, most existing three, four and five-star
hotels in Moscow and St. Petersburg were built during the last decade. As a result, Moscow currently
has 20,800 Western business-style hotel rooms, and St. Petersburg has 15,530.
According to Rosturism, total foreign tourism arrivals in 2010 were 22.3 million people
(+ 4% to 2009) and in 2011 were 24.9 million people (+12% to 2010). For the first quarter of 2012,
foreign arrivals have shown increase of 14% to over 5.5 million visitors.
Table 10. Hotel Industry Sales in Russia, 2007-2011
2007 2008 2009 2010 2011
RUR, billions 92.4 107.5 105.9 111.7 121
Growth Year on Year, % 16.3 -1.5 5.5 8.3
US Dollars, billions 3.62 4.32 3.34 3.68 4.12
Average exchange rates by years 25.49 24.84 31.72 30.36 29.35
Source: Federal State Statistics Bureau
Table 11. Number of hotels in Russia, 2007-2010
2007 2008 2009 2010
Hotels 5917 6774 7410 7866
Source: Federal State Statistics Bureau, BusinesStat
Table 12. Hotel Industry Sales in Russia, 2007-2010 by regions, billion rubles
2005 2008 2009 2010 Market share, %
Russia 60.098 107.522 105.904 111.737 100
Moscow 22.260 35.166 30.435 32.023 28.65
Saint-Petersburg 6.213 9.543 9.153 9.872 8.83
Krasnodar kray (Sochi) 6.392 13.230 14.584 15.219 13.62
Source: Federal State Statistics Bureau, BusinesStat
Moscow is one of the largest cities in Europe and remains the country’s main city for hotel development.
According to Moscomstroyinvest (a Moscow government development department), as of the end 2011
about 328 hotels were operating in Moscow with approximately 97, 850 rooms, 30% of which are 5 and
4 stars hotels. According to the British research company Hogg Robinson Group, since 2005-2008
Moscow has taken first place as the city with the world’s highest accommodation cost. Now Moscow
hotels price are cheaper than accommodation in London and Paris.
Table 13. Accommodation costs in Moscow Hotels (rubles/per night)
Star rating 2008 2009 2010 2011 Market share, %
5 17,087 12,236 11,500 11,400 10.4
4 14,442 9,615 9,500 8,900 24.2
3 9,718 6,476 5,800 5600 30
Economy 6,397 5,153 4,000 4000 35.4
Source: Consulting Company Cushman & Wakefield, Moscow Tourist Committee
Table 14. Moscow Hotel’s Statistics
Star rating 5* 4* 3*
Number of rooms, January 2012 2,920 7,470 10,440
Number of new rooms in 2011 616 304 223
Average hotel occupancy rate, % 63 65 64
Source: GWA Sawyer, Industry Data
Table 15. Saint Petersburg Hotel’s Statistics
Star rating 5* 4* 3*
Number of rooms, January 2012 2190 8160 5180
Number of new rooms in 2011 246 707 54
Average hotel occupancy rate, % 62 64 70
Average cost per room, rubles/per night 12,470 5,940 3,700
Market share, % 9.3 15.2 14.1
Source: GWA Sawyer
Since 1991 Russia has seen the emergence of more international brands and there remains further
opportunity for investment in the hotel sector across all categories. Moscow and St Petersburg alone
account for around 30% of the country’s hotel capacity. While the high-end sector is close to saturation,
there is a strong demand for midlevel hotel rooms. The highest level of unfulfilled demand is for quality
three star and economy hotels. The budget brands of Western hotel chains are not represented in Russia.
Table 16. Russia: Five and Four-Star Hotels Managed by International Corporations
Hotel Moscow Hotel of
O # of Rooms Other Locations # of Rooms perator Name operation
R Swissotel Krasnye affles H 233 2005 olmy 5*
International Mos 75 Samara 196 1991 cow H 4otel 4*
Moscow C 21ity St. Petersburg 316
C enter 4*
Courtyard Marriott 171
Mos 334 cow 5*
H 392 otel 5*
A 230 urora Hotel 5*
Tverskaya Hotel 162
Mona 366 rch
Hyatt Ararat Park Hyatt
International Mos 219 Yekaterinburg 297 2002 cow 5*
Inter Samara 177
C Holiday Inn ontinental helyabinsk 54 1998
otels Group St. Petersburg 557
Lesna 301 ya 4*
Crown Plaza 5* 577
Lig 195 ovskiy St.P 4*
A 294 irport St.P 4*
Starwood Le Meridian
Hotel & National 5* 221 1997
Moscow Country 131
H 204 otel 5*
Best Western Art-Hotel 4* 85 St.Petersburg 2005
H Balchug otels & St.Petersburg 197 1992
A Novotel ccor Group 488 St.Petersburg 233 1992
C 257 Yekaterinburg 168 ity-Center 4*
Hotels of the Savoy 5* 84
Rezidor Hotel Radisson SAS 1991
G 410 Sochi 415 roup Slavjanskaya 4*
R 150 Rostov on Don 82 iverside 4*
Radisson Royal 264
Ukraine 5* 543
R Kaliningrad 178 adisson Blu 264
Source: Department of External Relations, Moscow City Government and Industry Data
The regions outside of Moscow and St. Petersburg represent a small fraction of the travel industry, but
some areas such as Sochi, Rostov-on-Don and Vladivostok are growing quickly. Yekaterinburg,
Novosibrisk, Nizhny Novgorod, Krasnoyarsk, Kaliningrad, and Kazan are other regions where travel
and tourism are growing, particularly for business travel. Major hotel chains are opening facilities in
these regions. The Rezidor Hotel Group (including Radisson brands) is currently targeting some 35 key
cities in Russia with a population of 500,000 and above to further develop its portfolio of hotels and
brands, and the Hilton Worldwide is planning to open 28 hotels in the nearest three year. Other
international operators, such as InterContinental Hotels Group, Kempinski Hotels, Marriott
International, and Accor have built two-three new hotels in cities with populations over one million in
the last five years.
Hotel projects usually have a four to five-year development cycle, so the projects coming online in
2010-2012 were planned and, in many cases, financed prior to the start of the global recession.
Table 17. Moscow Hotels: New openings and future developments
Hotel name Star Cost per room, Number of Opening
rating rubles rooms Date
Lotte Hotel Moscow 5 12800-13800 304 2010
Ukraine/Radisson Royal 5 12800 543 2010
Grand Hyatt Residences & Spa 5 368 2010
Four Seasons Moscow 5 185 2011
Kempinski Hotel Nikolskaya 5 200 2011
Kempinski Hotel Beryozki 5 200 2011
Mandarin Oriental Moscow 5 237 2011
Raffles Moscow 5 130 2011
Shangri La Moscow 5 400 2012
Aquamarin 4 6800-7980 159 2010
Renaissance Moscow Monarch 4 366 2010
Garden Ring 4 7600-9600 86 2010
The Mandarin Residences 4 45 2010
Radisson SAS Riverside 4 150 2010
Radisson SAS Belorusskaya 4 264 2010
Scandic Khimki 4 300 2010
Mercure 4 103 2010
Radisson SAS Olimpiyski Hotel 4 382 2011
Holiday Inn Circus City 4 1000 2014
Katerina Park 3 260 2010
SK Royal 3 170 2010
Azimut Otel 3 144 2010
Source: www.prohotel.ru, Blackwood research, H/S Research
Table18. St. Petersburg Hotels: New openings and future developments, 2012-2015
Hotel name Number of rooms Year of opening Star rating
Four Seasons 183 2012 Luxury
Domina Prestige 109 2012 Upscale
Indigo, Ul. Chaikovskogo 119 2013 Upscale
Novotel St Petersburg Centre II 165 2014 Mid-market
Ibis, Fontanka 150 2014 Economy
Ibis, Mayakovskogo St. 200 2014 Economy
Holiday Inn, Ligovsky prospekt, 21 129 2015 Mid-market
Crowne Plaza Nikolskiye Ryady 334 2015 Upscale
Source: Jones Lang LaSalle Hotels
As many experts predicted, the 2014 Sochi Winter Olympic Games are spurring hotel development in
the region. All in all, 390 new hotels are expected to be built across Russia by 2012, with many in
Moscow, St. Petersburg, and several in major regional capitals. International hotel operators are building
hotels before upcoming events in the Russian regional centers. The following events are planned for the
near future: the World Students Games in Kazan in 2013, the Sochi Winter Olympic Games in 2014,
and the 2018 FIFA World Cup. Matches are to be held in 11 cities, including Moscow, St. Petersburg,
Kaliningrad, Kazan, Yaroslavl, Nizhny Novgorod, Samara, Saransk, Rostov-on-Don, Volgograd, and
The XXII Sochi Winter Olympic Games are planned for February 7-23, 2014, and the XI Winter Para
Olympic Games are planned on March 7-16, 2014. In December 2012, the Russian Government set a
maximum cost per room per night for the Olympic Games time period and events preceded them. The
maximum cost per night in 5* hotels will be 13,896 Rubles, in 4* hotels will be 13,048 Rubles, in 3* -
9,003 Rubles, in 2*, 1* or mini-hotel - 5,741 Rubles.
There are usually two restaurants in four-star hotels and three restaurants in five-star hotels. According
to industry sources, tourists often eat breakfast and dinner in their hotel, but they eat lunch in the city. In
an attempt to attract more of the tourist industry, hotels are offering special catering services for
different events. On average, room rentals account for 70 percent of hotel income, services account for
10 percent, and food and beverages account for 20 percent.
Luxury hotels represent the best opportunity for selling American products to hotels. Other sub-
categories usually have very limited foodservice offerings. Hotel restaurants operate like other
restaurants and purchase items through distributors. American meat, fish, wine, spirits, and fruit are
some of the better prospects for this segment.
Institution/catering is a challenging segment for American producers. Before the 1990s, catering was a
miniscule segment of the Russian hospitality market. Now, catering is a quickly evolving industry, with
Moscow claiming 62 percent of the market and St. Petersburg at 22 percent. There are an estimated 500
catering companies operating in Russia, including 30 major ones. Each year, 15 new companies enter
and 20 companies exit this intensely competitive industry. Russia’s leading caterers are Sodexho, Mega
Foods, Parad Catering, Brizol, and Master Foods which have total market share of about 50 percent of
The Russian catering market consists of several segments, each of which has a different service
audience, number of players, average bill per person, and profit, including:
Corporate catering; and
Urban dwellers have less time to prepare their own meals, so they often dine out or have lunch delivered
to the office. Lunch deliveries are a strong component of the catering business. The estimated value of
the lunch catering business in Moscow was $120 million in 2011. There is room for development,
however, as only 15 percent of Moscow’s office employees eat lunch prepared by qualified chefs.
Office cafeterias form another changing segment. Until recently, most cafeterias operated in the Soviet
fashion, offering few choices and low quality. As incomes grow, however, the office cafeteria is
transforming. Corporate catering firms manage stationary foodservice facilities, placing them in office
buildings, business parks, shopping centers, administrative complexes, and industrial facilities. Their
goal is to give people high quality meals in these institutions on a daily basis. The average bill in office
cafeterias is $6 to $8. Newer cafeterias are beginning to use higher quality ingredients. They still prefer
to buy whole, non-processed items, and they are very price sensitive. Like many restaurants, they
monitor prices weekly and do not hesitate to change suppliers or menus if they encounter a better price.
Catering for private events and parties, especially those in the premium segment is another attractive and
profitable area of foodservice. Consequently, well-known restaurateur Arkadiy Novikov entered the
catering business at the beginning of 2006. Other restaurateurs and five-star hotels are also rushing to
enter this lucrative market, including Gurme Catering, Baltschug Kempinski, and Swissôtel Krasnye
Holmy. Their teams of culinary professionals are willing and able to delight customers. Hotels are
attractive caterers because they are flexible enough to deliver a five-star experience in any venue, and
they have an extensive wine knowledge. The average bill for mid-level off-premise catering is $45 per
person, but prices can be significantly higher in the premium class.
Caterers use many categories to tailor their products to the client, and they usually work with the same
distributors as restaurants. Like restaurants, caterers use a variety of distributors and suppliers depending
on their needs. Mid-level and high-end caterers import a variety of food, presenting an attractive
opportunity for U.S. products. There is a particular demand for specialty items such as seafood, meat,
wine, and nuts.
While there is not yet a national school lunch program in Russia, there is interest in creating one. The
Russian government is studying the U.S. government program and will no doubt incorporate some of its
elements to improve the school lunch program in Russia. Packaged food for institutions may have some
potential in Russia, but the cost and logistics of importing U.S. products may deter potential customers.
Nevertheless, potential demand exists for rice, peas, beans, and lentils. Soup bases, spices, and
institutional food packs could also appeal to some companies.
Universities, hospitals, and the military could be other potential customers for catering companies, but
tenders are often not competitively bid for catering contracts with government institutions.
In 2008, Russian Railways created the joint venture Yedinaya Set Pitaniya with RP-Com, one of the top
20 foodservice operators in Moscow. This enterprise manufactures ready meals for passengers of the
Russian high-speed railways, which currently operates on three lines: Moscow-St. Petersburg, Moscow-
Nizhny Novgorod and St. Petersburg-Helsinki. By the end of 2010, the company produced 20,000 meal
trays per day from its first catering facility near St. Petersburg. Other catering facilities will be built in
Yekaterinburg, Novosibirsk, Sochi, and Rostov-on-Don. According to RF Government plan, 8 Russian
cities hosting 2018 World Cup matches should be linked by an integrated high-speed rail network.
Operators at the major airports in Moscow and St. Petersburg usually function more as part of a
restaurant chain than as an institutional operator. According to airport statistics, 30 to 40 percent of
passengers eat in airports. Leading Russian foodservice operator Rosinter has opened and operated
restaurants in Russian airports since 2003. Its experience earned Rosinter the responsibility of being the
primary foodservice operator in St. Petersburg’s Pulkovo airport in 2007. In addition to operating the
airport’s restaurants, Rosinter also feeds the airport staff. Rosinter built a kitchen facility in the Pulkovo
The volume of passenger traffic in Russia exceeded 55 million in 2011. The volume of passenger traffic
through Moscow’s two main airports, Domodedovo and Sheremetyevo, exceeded 42 million passengers
in 2011. Airlines contract with professional catering companies for in-flight meals for passengers. JSC
Domodedovo Air Service is the largest Russian company serving up to 60,000 in-flight meals and
rations per day in Domodedovo airport. AeroMar has provided in-flight catering services to the
passengers of Sheremetyevo airport since 1990.
Joint-stock company "Rossiya Airlines" is the leading air carrier in North-West Russia. Rossiya Airlines
is located in St. Petersburg and operates up to 40% flights from Pulkovo airport for more than 70
destinations. Since 1993, the airline has its own catering division. Daily, Rossiya Catering produces up
to 20,000 portions of in-flight meals for all domestic and international airlines flying out from Pulkovo
airport. Considering the increasing demand for high-quality airline food, airline foodservice could
become an attractive niche market for U.S. food and beverage exporters.
Another great opportunity for American producers and Russian foodservice operators will be the Sochi
Olympic Games in 2014. Last year the Russian government renovated the Sochi airport, increasing
capacity to serve 1,300 to 2,500 passengers per hour. In the buildup to 2014, Russia will construct
restaurants, stadiums, and 57,000 hotel rooms to serve sports teams and guests in Sochi. These will all
provide a valuable potential market for American producers.
SECTION II: ROAD MAP FOR MARKET ENTRY
Distribution Channels for HRI Products in the Russian Market
Figure 2 shows the distribution channels for HRI products in the Russian market.
Domestic and imported food products for Russian foodservice establishments come through importers,
distributors, and wholesalers. Large suppliers are typically also importers. For smaller restaurants and
hotels, most foodservice purchases are made through a wholesaler or importer/distributor. Large chains
may choose to purchase directly through customized growing agreements or through a central buying
office. Most hotels and restaurants choose to purchase the majority of products through foodservice
importers/distributors in the HRI sector, both large and small. Specialty and seasonal products are
purchased through smaller distributors or directly from local producers.
Table 19. Russia: Advantages and Challenges for U.S. Exporters
Paying in Dollars is advantageous for exporting Ruble/$ exchange rate has led to an increase in
to Russia compared to Europe due to the lower the price of U.S. products, mitigating some of
cost of the Dollar relative to the Euro. the positive effects of the advantage over the
Russia’s 142 million people make it one of the Official government opposition to growth in
largest consumer markets in Europe. food imports.
Rising disposable incomes in the long term will Economic vulnerability, dependence on oil and
allow Russians to spend more on food and mineral extraction for most wealth.
The Russian government has committed to Competition with food products imported from
spending billions on infrastructure over the next EU and other countries may rise.
10 years, particularly railroads and highways,
which should translate to better logistics.
U.S. products have a reputation for consistency Logistics can be difficult. There are often long
and high quality. shipping times from the U.S., the major Russian
port in St. Petersburg operates slowly and there
can be complex customs regulations.
The HRI sector has a lot of room for growth. Consumer confidence has not fully recovered
Restaurant chains are expanding out of Moscow from the economic crisis thus discretionary
and St. Petersburg to other cities with spending among the middle class still has room
populations over one million. to grow. Customers are very price sensitive.
Russian joined the WTO in August 2012 and its
trade and investment policy is converging with
Entering Russia’s market can be incredibly rewarding, but it requires hard work and careful planning by
U.S. exporters. Different types of products require different marketing strategies. Many meat, seafood,
wine, and spirits companies are selling U.S. products to the HRI sector and their businesses are
flourishing. Several general recommendations may be helpful for developing a successful entry policy:
Work with a Russian Importer: Direct importation is difficult without a large customer base, so it is
best to find an importer. To work with Russian Customs, it is essential to have a physical presence in
Russia. U.S. exporters can approach the Russian HRI food and beverages market through a general
importer, with whom good relations are essential. Selecting the right trading partner is one of the most
important decisions for exporters when developing their businesses in Russia. A local Russian partner
who is familiar with market conditions and the regulatory environment can help exporters navigate the
Russian HRI market, resolve issues, and increase the likelihood of success. The importer should be able
to handle customs clearance, veterinary and phytosanitary inspection requirements, any necessary
guarantees, and all licensing procedures.
Logistics must be carefully considered and monitored, so close contact with the importer is also
necessary in order to avoid logistical problems and shipping delays. Consider the longer shipping time
for U.S. products compared to products from Europe. It is essential, for example, that all required
documents be filled out as quickly and efficiently as possible. Most products will enter Russia through
St. Petersburg, but if a U.S. exporter wishes to operate in the Russian Far East, Vladivostok is another
option. Consistency and necessary quantities of production in the supply chain are frequently cited as
primary concerns for the HRI segment.
Exporters representing U.S. companies may contact the Moscow ATO for assistance in locating
importers. Performing due diligence is nevertheless important, and exporters are expected to verify the
banking and supplier references of potential importers. Local and U.S.-based organizations in Russia can
also provide helpful information to exporters. Credit reporting, however, is a relatively new practice in
Russia, and credit-reporting agencies may not have complete information on potential Russian business
partners. It is common for U.S. exporters to require 100% pre-payment for the first shipment.
Work with a Russian Distributor: U.S. exporters will need a distributor in order to sell their products.
Large suppliers are typically also importers, and most HRI outlets rarely import products directly,
preferring to procure supplies through local distributors. International chains with internal distribution
networks within the country are the exception. The larger distributors are suited for commodity and
large-volume sales. Smaller distributors work well for specialty, high-end, or new pro