Russia and Iran face long waits for McDonald's due to international disputes

Russia and Iran face long waits for McDonald's due to international disputes
Local brands have taken the place of American fast-food giants. / CC: Tehran Design
By bne Tehran bureau June 7, 2024

The global fast food industry has become increasingly homogenous in recent years, with the same offering in nearly all countries and territories. However, there are at least four countries where the Americans are struggling to find a place or in the case of two of the countries, outright banned. Russia, Belarus, and Iran are now in an unlikely club, being the only countries where McDonald's shut down operations due to political realities.  

The departure of McDonald's was mainly symbolic in Russia, as the company was the second Western consumer brand to arrive in what was still Soviet Russia in 1990 when it opened its iconic store on Pushkin Square in the heart of Moscow in 1990 in a deal done under Communist Party chairman Mikhail Gorbachev, who died last year.

The first major consumer brand to enter Russia was Pepsi, due to a deal struck between US President Richard Nixon and Soviet leader Leonid Brezhnev, and opened its first factory in 1972. When Coca-Cola finally arrived after the fall of the Soviet Union in 1991, Pepsi started to lose business as Russians wanted to try the “American cola” as Pepsi was seen as a Russian brand and then launched an extensive PR campaign to remind consumers of its US origin. Ironically, since the brands officially pulled out of the Russian market, Iranian Coca-Cola has taken its place. The Iranian Coca-Cola brand arrived as a shock to Russians looking to quench their thirst with “The Real Thing”.

One Russian social media account mockingly dubbed the drink “Aya-kola”. At the same time, another quipped that after two sips of the Iranian Coke, “you will be defending the Islamic Revolution, and with three sips you’ll be off to fight in Yemen.”

Meanwhile, Kentucky Fried Chicken (KFC) faced the same fate as the more prominent fast-food brands and exited the country after a debacle getting caught up with Russia’s government effectively placing an “Exit Tax” on the firm leaving its operations while also having to deal with the cumbersome US Treasury Department’s Office of Foreign Assets Control (OFAC).

Yum! Brands, which owns KFC, said it had finalised its exit from Russia in April 2023, transferring the master franchise rights to a local company called Smart Service, a local franchisee led by Konstantin Kotov. If you want chicken in Russia, you must now look for a big “R” for Rostic.

Those who dodged the sanctions

Still, as the Ukraine war drags on, McDonald's rival Burger King continues to be active in Russia despite calls for them to leave the country. With 800 outlets, Restaurant Brands International (RBI), which has a 15% stake in the fast-food franchise in the Russian Federation, said in response to a BBC enquiry in October 2023 that it had “no new updates to share at this time.” By summer 2024, the Burger King website remained active, and operations continued unabated. 

Other brands, including Subway, Carl's Jr., Papa John's Costa Coffee, and TGI Fridays, have continued to operate in Russia with no signs of leaving. The US headquarters say that many brands are sub-franchisees of their master franchiser. Ultimately, there is nothing the American parent company can do to stop them from operating and advertising in that market. 

The sandwich maker told the Kyiv Independent that because it has “no corporately owned restaurant operations in Russia,” all of its restaurants are “independently owned and operated by a master franchisee, an independent US company called Subway Russia.”

“Subway (HQ) does not directly control these franchisees, nor their restaurants, and has limited insight into their day-to-day operations, and that it’s Subway Russia that “manages all operations, marketing, social media accounts, and the supply chain,” the company said.

Iran's unique takeaway situation

In Iran, local fast-food chains have sprung up as American brands have been absent for more than 45 years, offering similar products but with a distinctly Iranian twist. This isn't just about food; it's about identity. 

In the case of Iran, local brands have moved beyond mere copies of the American fast-food giant but have chartered their own course and used local agencies to develop their brands. In Tehran, at least, the drive-thru concept has never flourished, and delivery and eating out have replaced other weekend pastimes.

Moreover, Tehran and Iran, in general, with their rich history, have built on their cultural references with Western fast food brands like Boof (Owl), which was popular in the early 2000s. Moreover, other famous brands like Burgerland, backed by Iranian popstars a decade back, have also become a staple of the local industry. 

Meanwhile, companies like Five Guys don't stand a chance of taking fake brands to court in Iran. With at least one "semi-official" version of the brand in the west of Tehran quite happily using the American brand's name and restaurant style. IntelliNews interviewed the workers, who said that they were "technically" Five Guys and then carried on cooking their food. 

Other brands have faced a similar situation to Five Guys, with Nando's getting the Tehran treatment in 2013. Large billboards advertising the South African chicken brands appeared in uptown areas of the city. An IntelliNews investigation discovered the local Nando's had nothing to do with the international variant, with legal teams "exploring" how to tackle the issue. 

Before the 1979 Islamic Revolution, which booted out Western brands, companies like Kentucky Fried Chicken (KFC) and McDonald's were slowly making their mark in the country, with a visit from Colonel Sanders himself. That story of his visit has become folklore. Tired of knock-off Iranian brands using the KFC brand, Sanders flew to Tehran to attempt to sue the companies for using his image, it didn’t go anywhere with even the pre-revolutionary court booting out the case.

Still, years later, the original KFC in Tehran is open and rebranded as Tehran Fried Chicken (TFC) on the city’s main drag, Valiasr Street. Ironically, photos of the Sanders adorn the restaurant, including the images of him standing in front of the now-rebranded restaurant.