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World | Of Famous Arches, Beeg Meks and Rubles
Of Famous Arches, Beeg Meks and Rubles
See the article in its original context from January 28, 1990 , Section 1 , Page 1 Buy Reprints
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In the dingy gray of a Moscow winter morning, the new McDonald's restaurant is an otherworldly presence, huge and sleek and lighting up Pushkin Square with a red and yellow Technicolor glow.
When this ultimate icon of Americana opens to the ruble-paying masses on Wedneday morning, it will represent not just an architectural curiosity, but a triumph of capitalist determination.
Already the missionaries of the fast-food chain have taught farmers in this potato-addicted country how to grow potatoes.
They have drilled hundreds of Soviet teen-agers in habits of unrelenting cheer and fanatic cleanliness that contradict every dour instinct of Soviet service personnel.
This week they will teach queue-weary Soviet customers how to stand in line - not snaked along the counter Soviet-style, but in separate columns at 27 cash registers - and what to do with a tray of unfamiliar food encased in futuristic wrappings.
''We're going to McDonaldize them,'' said a company executive this week, summing up the company's cultural conquest.
Strangest of all, the company promises to do something few foreign ventures have achieved: make an enormous amount of money serving Soviet consumers.
For all the fanfare surrounding the hospitable business climate created by President Mikhail S. Gorbachev, most foreign companies never get their projects beyond the optimistic handshake.
Richard N. Dean, a joint-venture specialist who heads the Moscow law office of the Coudert Brothers law firm, estimates that of the 1,400 joint-venture agreements Moscow has signed with Western firms, fewer than 50 are actually operating, and perhaps 100 have much prospect of ever extracting a profit.
Most entrepreneurs never overcome the most daunting hurdle of selling in the Soviet Union: what to do with masses of rubles, which are worthless on the world market and have less and less purchasing power here.
The few companies that succeed usually do so by catering to tourists toting foreign currency, or by buying Soviet raw materials that can be exported to the West.
The McDonald's venture also employs a number of gimmicks to enhance foreign-currency earnings, but the company says its real target is the hungry 290-million-customer Soviet market.
''We're not some pizza truck that goes in and comes out,'' said George A. Cohon, chairman of McDonald's Restaurants of Canada Ltd., who has nursed the Moscow project along since he first broached the idea to Soviet officials visiting the 1976 Montreal Olympic Games.
''We've made a $50 million investment,'' he said. ''We've made a decision to come in for the long haul.''
The company's first Moscow store will be the largest McDonald's in the world, geared to serve 15,000 or more customers a day, for rubles only.
The prices will be high for customers raised on subsidized food - a ''beeg mek,'' french fries and cola will run about five rubles, half a day's wage for the average Soviet worker - but no one doubts that the volume will smash company records.
The store is centrally situated on what may be the city's most desirable piece of commercial real estate, convenient to a huge movie theater and favored turf for glasnost-era political demonstrations.
And Soviet television viewers have been tantalized for more than a year by reports of the impending venture, often accompanied by awed reportage on the McDonald's work ethic, the McDonald's quality control system, the economics of a McDonald's meal.
Since the construction fence came down last week, passers-by pause to gawk at the pristine glass, the dazzling flourescent lights and molded plastics assembled by Yugoslav workers.
''The design is so beautiful,'' said Katarina Klopichova, a 17-year-old economics student, one of the fresh-faced Muscovites selected from 27,000 applicants to bestow burgers and cheer on the oppressed Moscow consumers drawn to its golden-arches-and-Soviet-flag logo.
She speaks of her workplace as if it were the Cathedral in Chartres - a place to which Soviets will come long distances, not for mere lunch, but for an experience of celestial joy.
Miss Klopichova's perkiness flags only when she is asked about the pay, which starts at a ruble and a half an hour, generous by Soviet standards but not what she expected of a rich international food giant. ''To my mind, it is miserable,'' she said.
On its own, the Pushkin Square restaurant would be a vast machine for generating rubles, and would probably be referred to in Canada as George Cohon's folly. But the store is not on its own.
A second store, down Gorky Street near the central post office and a cluster of tourist hotels, will sell for foreign currency only. It is to be a font of dollars, from which McDonald's will receive a royalty based on the revenues from all stores.
But the real key to the venture is a $4 million Finnish-built processing center, situated on the northern outskirts of Moscow, which is transforming locally available ingredients, available for rubles, into a McDonald's menu.
Here, at a glistening new complex encompassing a bakery, dairy, potato-processing line, meat plant, sauce cookers, laboratories and vast storage freezers, McDonald's will turn its ruble revenues back into fast food.
Finding acceptable local raw materials has entailed a year-long hunt through the dismal and sometimes stomach-turning landscape of the Soviet food industry.
One McDonald's meat scout, no stranger to slaughterhouses, was sickened by his visit to a Soviet abattoir.
More commonly, said Terry Williams, the product-assurance manager who supervices the complex, the problem was a Soviet system so rigid that even with the Moscow City Council as 51 percent owner of the venture, and even with Kremlin backing -Mr. Gorbachev's close intellectual adviser, Aleksandr N. Yakovlev, a former Ambassador to Canada, has been a key backer manufacturers could not be induced to bend to McDonald's specifications.
''First of all, so many plants are under strict allocation,'' Mr. Williams said. ''Everything they produce is already taken. They don't have the opportunity to produce extra product, such as for us.
''And the Soviet norms are very specific. They say this plant can only produce mustard, and Soviet mustard must meet this norm. So it's not easy to get them to produce something specifically for you.''
In the end, McDonald's gave up and imported mustard from Canada. Tomato paste comes from Portugal and apples from Bulgaria. But both are obtained by the Soviet partners for rubles.
Most of the packaging material is imported, as are the requisite sesame seeds.
To get the large white potatoes specified for its french fries, the company imported Russell Burbank seed potatoes from the Netherlands and installed an agronomist on a local collective farm to supervise the crop from planting to harvest.
Other farmers were induced to grow hothouse Iceburg lettuce, not part of the Soviet diet, and pickle cucumbers from imported seed. By luck, the company found a dairy in Volgograd that makes cheddar cheese, which is brought to Moscow and processed into bricks for cheeseburgers.
''Eventually we hope that we will find suppliers for everything that we do here,'' Mr. Williams said.
Mr. Cohon said the processing center had capacity to produce buns, potatoes or dairy products for joint-venture hotels and restaurants in Moscow, and apple pies for export to Europe, generating additional hard-money income.
''If we still have millions of rubles left, maybe we can take some commodity out for export,'' he said. The company has talked of organizing a cod-fishing venture in Estonia, or investing in Moscow hotel construction.
In the minds of some Soviet citizens, McDonald's investment is merely repaying an old debt - namely, the invention of the hamburger.
''The word hamburger spread throughout the world from the swift hands of Hamburg seafarers, who in ancient times carried from Russia the recipe of a popular Tatar dish made of raw meat and hot spices,'' disclosed a Soviet television report in September on the advent of McDonald's in Moscow. ''The recipe made it to England, and from there to America and Canada. And now, after centuries of wandering, it has returned home to its motherland.''

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When the doors swung open Wednesday at the first McDonald’s restaurant in the Soviet Union, thousands of Muscovites poured in to sip “milk cocktails” and taste their first “Beeg Mak Gamburgers,” picking them apart to marvel at the fixin’s.
Some expressed wonder at the speedy service--"only an hour in line"--while others heralded the event as the first evidence that President Mikhail S. Gorbachev’s economic reforms are finally filtering down to the average Muscovite.
Although cynics might complain of the steady homogenizing of world cultures, the arrival of the fast-food chain here--14 years after a Canadian McDonald’s official broached the idea with Soviet officials at the 1976 Montreal Olympics--was without doubt a major event.
Most customers seemed thrilled to be part of it, even though some of them gave the Big Mac sandwich a mixed review.
“It tasted very, I would say, unusual,” Lubov Sereda, 45, said with a smile. “Everything was very soft and mild.”
“But those strawberry milk cocktails, well. . . ,” her husband put in, flashing a thumbs-up sign.
“It was very interesting, that gamburger,” Zvetlana Generotova, 25, said, leaving with a large paper bag filled with take-out food, also a new concept here. “I certainly want my family to try it, at least once.”
Russians say “gamburger” because they pronounce Western words that begin with “h” as though they begin with “g.”
Another customer, Victor Kunyasev, said: “Well, my wife makes better food. But it was nice, a good place to take a break and grab a bite to eat.”
Some reported waiting up to 1 hour and 45 minutes to be served, but most did not seem to mind. In honor of the grand opening, a brigade of workers distributed McDonald’s flags and pins; entertainers performed on the accordion and sang folk songs under golden arches adorned with the Soviet hammer and sickle.
The world’s largest McDonald’s, with 27 cash registers and a seating capacity of 900, brings to Moscow not only hamburgers, french fries and shakes (called “milk cocktails” here), but also a living lesson in Western-style marketing.
At training sessions before opening day, cashiers were taught the importance of greeting customers cheerfully, of saying “please” and “thank you"--all of which promises something distinctly different from the typically surly service at most of Moscow’s dingy state cafes.
“This is very different from anything I’ve ever done before,” cashier Larissa Lebedeva said. Lebedeva, 25, who formerly worked as deputy director of a small food store, said that “to be this polite and to have everything this clean is new for the workers as well as for the customers.”
Sam Yahel, from McDonald’s in Atlanta, who helped train the 630 Soviet workers, said the Soviet trainees were at a disadvantage because in most other parts of the world, new workers had at least eaten at one of the restaurants.
Most of the Soviet workers had never tasted a Western-style hamburger. They practiced cooking using yellow cardboard squares in place of cheese and different colored poker chips in place of onions, tomatoes and pickles.
“The Soviet Union is definitely a different world,” Yahel said. “Our food and our standards--it’s all new. For example, we had to teach our employees that when there were still crumbs on the counter, it needed to be wiped off again.”
While most of the Soviet workers trained for a matter of days, the four Soviet managers of the restaurant spent nine months abroad learning their jobs. They graduated from the Canadian Institute of Hamburgerology.
The Moscow McDonald’s will be open for 12 hours a day beginning at 10 a.m. and will be able, they say, to serve more than 15,000 customers a day.
On Wednesday, though, it stayed open an extra two hours and served a McDonald’s record 30,000 meals. The previous record for opening-day transactions was 9,100 in Budapest, Hungary, and the previous record sales for a single day was 14,000 in Hong Kong.
There is a brass plaque near the entrance that announces, “Soviet Rubles Only.” Virtually every other foreign firm that has come into the Soviet Union in recent years accepts only hard currencies, meaning that it caters primarily to foreigners.
The McDonald’s prices are high compared to the state restaurants, where a large meal seldom costs more than a ruble. The Big Mac costs 3.75 rubles, or about $5 at the official exchange rate, and dinner out for the family can come to two days’ wages for the average Soviet worker.
McDonald’s employees are paid 1.50 rubles an hour, with a chance for an increase of up to 50 kopecks in three months’ time. The staff was chosen from 25,000 applicants.
Canadian and American officials who have helped train the Soviet personnel know that the allure of working for a Western firm was a drawing factor, but they nonetheless expect a 20% turnover rate, twice their normal average.
McDonald’s invested $50 million in setting up the restaurant and a food processing plant in a Moscow suburb that turns out everything from meat patties to sesame-seed buns. Soviet farmers, who are supplying most of the products, have been given special training and disease-resistant seed for potatoes and cucumbers.
The extra effort was necessary to guarantee supplies in a country where as much as 25% of the harvest spoils on the way to the consumer.
Despite all of the planning, some shortages still affect the operation. Coffee is not on the menu, for example, because supplies cannot be guaranteed.
The joint venture agreement between McDonald’s of Canada and the Moscow City Council calls for 20 restaurants, though there is no timetable or even a definite plan for when or where the second McDonald’s will open.
Is there any fear that when the golden arches become as common as the cupolas of Russian Orthodox churches, it will be a sign that capitalism is making real inroads in the Communist capital? McDonald’s officials say it is not a question that worries them or their Soviet counterparts.
“There weren’t many ideological discussions during these negotiations,” said Marc Winer, 43, a native of Nashua, N.H., who is general director of the Moscow outlet. “The Soviets understood that the food was going to move very efficiently from the field to the mouth. That is more important to them right now than almost anything else.”
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