New players open menus on Russian fast food market

Russia's fast food market has shown huge growth over the past decade, with international and local players alike reaping in the benefits. Some local expats have come to the market looking to take a seat at the table.

The nation’s entire food outlet market was valued at about 24 billion in 2009, with Fast food accounting to 30-40% of that – or about 8-10 billion worth of take aways.

The market has boomed during the past decade and this has seen the rise of home grown fast food, and an increasing number of global brands looking to cash in.

A recent addition to market comes from a group of expat entrepreneurs who figure they can turn a profit selling Russians a product they usually make in their own kitchens. People like Alex Shifrin, Business Development Director for Soupchik, feel they can create a place at the table despite the economic slowdown

“There's been a mass trend in down- grading money spent on eating out. People are looking for fast food options but a lot don't want to sacrifice things like quality. There's an increasing interest in health. Some segments are saturated. Some are starting to lose popularity.”

Soupchik believe Russians serve up 32 billion soup portions a year, with sales growth of 25% expected in the next 2 years. That sort of growth forecast is common across a wide range of fast food varieties.

From potatoes to soup to hot dogs, chances are, if you're looking for fast food in Moscow, you'll find something that suits your taste. An interesting thing about the market is that many players don't see other outlets as competition, per say, in that many have their own specialized culinary niches.

Maksim Klyagin, an analyst at Finam Management, says that despite the range already available, there is plenty of room around the table for new players to take a seat.

“Without a doubt competition exists. There are certainly a number of large players. But at this stage, it's all more or less comfortable because the market still isn't saturated in spite of the development that's taken place for the past decade. Generally, we see great potential for future growth leading up to the presence seen in Western Europe.”

April saw McDonalds reveal that in 1Q 2010 its European outlets outperformed those in the US when it came to growth. They are eyeing a further 45 outlets in Russia with a planned $150 million in new investment.

With market players swarming in, Russian consumers will dine out on an increasing range of fast food options while the menus of domestic entrepreneurs and multinationals slug it out for their custom.