Relative Nazarbayev will buy a franchise of McDonalds in Russia

The Kazakh partner

The Federal Antimonopoly service (FAS) approved the deal to sell a 99.99% stake in Moscow “Regional network of catering enterprises” (JSC “SPP”), says the Agency. According to SPARK, the company SPP was registered in February 2016 and is now 99.99% owned by McDonald’s, which manages the business of a restaurant network in Russia). The remaining of 0.01% in the ownership of ZAO “Moscow-McDonald’s” (100% “daughter” of the American McDonald’s). The company’s authorized capital amounts to 6 billion rubles.

As explained RBC in the press service of McDonald’s, SPP will manage the franchise restaurant chain in 13 regions of the Urals and Volga Federal districts of Russia.

A source in the “McDonald’s” and two sources in the markets of commercial real estate and retail told RBC that the new franchisee will be Kairat boranbayev. This is one of the richest businessmen of Kazakhstan, who have family relations with President Nursultan Nazarbayev in 2013, his daughter Alima Boranbayeva was married to the grandson of the leader of the country.

2013 boranbayev develops a franchise of McDonald’s in Kazakhstan and Belarus. The first McDonald’s opened in Kazakhstan in March 2016, for three to five years, a businessman plans to open in the Republic of 15 fast food restaurants, wrote TASS. In Belarus operates ten McDonald’s: nine in Minsk and one in Vitebsk.

Official comments from representatives of Boranbayeva at the time of publication of the material could not be obtained. “It is necessary to clarify the classification of the contract whether it is precisely a franchise, or from a legal point of view, it will be decorated differently”, said the interlocutor of RBC, close to the businessman.

“Between CJSC “Moscow-McDonald’s” and “Regional network of catering companies have signed a contract of commercial concession”, said the press service of the Ministry, without disclosing, however, the name of the end customer. Under the terms of this agreement of SPP, OOO will be to develop the franchise “McDonald’s” in the Sverdlovsk, Chelyabinsk, Orenburg, Kurgan, Tyumen and Kirov oblasts, the Republic of Bashkortostan, Udmurtia, Tatarstan, Komi, Republic of Mari El, Chuvashia, Perm region.

According to the website of the company in these regions now operates 67 restaurants “McDonald’s”. A source close to the “McDonald’s”, says they will move into the control of the new franchisee. Previously signed lease agreements perepodpisana on SPP, OOO, the source said RBC in the commercial real estate market. The new structure transferred employees “McDonald’s” in these regions, wrote Znak.com. McDonald’s is now actively seeking new premises in these regions, and the contracts will be registered to the SPP, OOO told by the consulting company “Shop of shops”.

<p>Kairat boranbayev, one of the&nbsp;richest businessmen of Kazakhstan, which already owns the franchise network &laquo;McDonald&raquo; in&nbsp;Kazakhstan and&nbsp;Belarus</p>
Photo: Vyacheslav Prokofyev/TASS

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Kairat boranbayev, one of the richest businessmen of Kazakhstan, which already owns the franchise of a network “McDonald’s” in Kazakhstan and Belarus

Who Kairat boranbayev

Kairat boranbayev takes the 15th place in the rating of 50 richest businessmen of Kazakhstan, with a fortune of $350 million, writes Forbes Kazakhstan. Previously, he was the Director of “KazRosGas a joint venture between state oil and gas company and “Gazprom”. In addition, Kairat boranbayev owns one of the nation’s largest shopping centers Alma-Ata, a network of cinemas Bekmambetov Cinema and health clubs Fitnation, a hotel complex Medeu Resort and other assets.

Boranbayev President of the public Association “Boxing Federation of the Kostanay region”, President of the National Paralympic Committee, Chairman of the Supervisory Board of FC “Kairat”, where, in particular, plays a Russian football player Andrey Arshavin.

Slow start

Worldwide, McDonald’s developed mainly for the franchise. As reported on the corporate website of the restaurant chain, it has a population of 36 thousand points and more than 80% of them belongs to the franchisee. In Russia the situation is reversed. More than 20 years, since the opening of the first restaurant on Pushkin square in Moscow in 1990, the American company developed independently.

The first franchisee in Russia appeared only in 2012. They became company “Development Growth” (enters into holding “Rosinter”, developing network of restaurants “IL Patio, planet Sushi, Costa Coffee, etc.), which had the right to work in the transport hubs, particularly in Moscow airports.

The second franchise agreement McDonald’s has signed only three years later: its partners are the structures Intrusives” and “Guide” the Siberian businessman Aleksandr Dialect (also is an investor of the Yaya oil refinery in Kuzbass). Dialect had the opportunity to develop restaurants in four regions in the Urals: in Novosibirsk, Tomsk, Kemerovo regions and Altai Krai. At the same time the network sold him four already operating restaurant in Novosibirsk.

This transaction fits our strategy of McDonald’s in Russia. According to the plan in the next three to five years, the proportion of franchise restaurants by total number of outlets in Russia will amount to 20%, said the President of “McDonald’s” in Russia Hamzat Hasbulatov RBC in early 2016. The network now has 573 points in Russia.

According to Director of consulting company RestCon Elena Perepelitsa, push McDonald’s to switch to a franchise system could pressure from the Russian authorities. “The sole owner of the company more difficult to repel the attacks. The allocation of business between different owners], these attacks become less effective,” she says.

In 2014, the CPS has carried out a massive inspection of restaurants “McDonald’s” in dozens of regions, and temporarily closed four restaurants network in Moscow, including the flagship, on Pushkin square. Referring to the words of Federal officials, the newspaper Kommersant then reported that test the network go on behalf of the government. The interlocutors RBC is also seen in the actions of the CPS political subtext. This is a response to sanctions considered first Deputy Chairman of the Duma Committee on economic policy Mikhail Emelyanov: “This is a hint at what we can do; for McDonald’s in Russia is an important market.” Deputy Prime Minister Olga Golodets, however, refuted this information, saying that the government has no “total plan” inspections of the restaurant chain.

The current deal is purely market-oriented, the Executive Director of the Russian franchise Association Yuri Mikhailichenko, is a scheme in which “McDonald’s” has developed historically. “First, the company built a restaurant, then passed it to the management of managers, and then they and sold it,” says Mickle. The time of the sale, “McDonald’s” already pay the costs, and then receive only royalties. Thus, the company, on the one hand, was removed from his administrative load, and on the other she was confident in the team that passes the restaurant.

The price of fast food

According to the American website-aggregator franchises FranchiseHelp.com in 2015 the cost of the franchise fee to open a restaurant “McDonald’s” was $45 million, royalties 12% of turnover. To open a franchise of McDonald’s, the required investments totaling $1-2,2 million (65-143 million rubles at the current exchange rate), according to the website aggregator.

Yuri Mikhailichenko estimates the investment to open one restaurant “McDonald’s” in Russia in the amount of 60 million to 120 million rubles. on this Basis the authorized capital of SPP, OOO 6 billion rubles may be equivalent to 67 restaurants and to be the transaction price, he said.

According to a leading consultant of the consulting company “Shop of shops” Alexander Romashin, the benefit of McDonald’s that the company saves on the costs associated with the management, without losing the steady income from restaurants in the form of royalties and, perhaps, some percentage of turnover. “Most likely, this decision was taken due to the fact that there are certain difficulties in managing such large and remote regions, and the parent company felt that it would be more advantageous to transfer to their partner and have a stable income,” said Romashina.

Perhaps the regions of the Ural and Volga Federal districts proved to be challenging in terms of management or personnel, agrees the head of Department of sales of franchises company “Francon” Anna Christmas. “Kairat boranbayev is a franchisee of the brand “McDonald’s” on the territory of Kazakhstan and Belarus, therefore this person is not new for the network, ” adds Christmas. Work with partners easier. They already thoroughly know the algorithm of the opening of new outlets, have a professionally trained team, which reduces the time and cost of access to the region.”