McDonald’s in Armenia?

In April of the current year a meeting with representatives of McDonald’s is expected in Orlando, the USA. During the meeting opening a restaurant of the leading fast food network in Yerevan will be covered. The news has been circulating for over ten years. The company registered its trademark in Armenia in 1999, however, it hasn’t ever been used in our country. At the same time, there was news that an agreement was reached by Tashir Group, and, at last, McDonald’s will be represented in Armenia. This time initiator was Temur Chkonia, founder of Georgian McDonald’s.

Opening of McDonald’s restaurants is quite a difficult and expensive process, if it’s opened not by the restaurant, but by the brand. For this, it’s necessary to conform with a rage of demands, for instance, pay USD 45 thousand only to McDonald’s for the right of operation, the restaurant should have at least 20 employees, 4% of overall return should be transferred to the company; logistics, number of population, purchasing capacity and etc. are also taken into consideration.

Number of fast food restaurants in Yerevan is not big. To discuss issues to which extent McDonald’s will have a demand in Yerevan and what will it change in the market, 168.am contacted Gagik Kocharyan, Head of the Department of Trade and Markets Regulation of RA Ministry of Economy.

“McDonald’s acts in the same field as KFC, there is Queen burger in Yerevan as well, they are alike. Any competition may lead to price reduction. Maybe McDonald’s will be successful. We have a wider mass of students, who may become their consumers,” G.Kocharyan said.

He stated, that currently McDonald’s didn’t apply to the Ministry, as, for instance, Carrefour initially applied and familiarized with existent order and legislation; we met Carrefour representtaives, gave them packages, as for McDonald’s we didn’t do it. They may not apply to us, in Armenia they are free to perform any activity, they only need to register their company, become RA resident by foreign investments, or they may launch their operations via franchising. They don’t have any issue. It’s not obligatory to apply to the Government or the state.”

According to G.Kocharyan, it’s a principle that big companies register their brand in all the states to avoid problems in future. Head of Trade Department hesitated to answer why up to day the brand doesn’t appear in Armenia, although it’s mostly touched upon.

“I can’t say why they’re not launched in Armenia. Probably there is a issue of way of thinking. This is an issue of their internal marketing and survey.”

Formerly attempt was made by businessman Khachatur Sukiasyan to bring in McDonald’s. In an interview with 168.am Sukiasyan mentioned, that there is general calculation and approach, that sales volumes in Armenia are not large, and there is no policy resolution in McDonald’s to be represented in Armenia. In his words, if a decision is made there are calculations, that the number of McDonald’s restaurants in our country won’t exceed 5.

“McDonald’s has a special way of production. It links its production with sales system: if the issue is settled, it should come either from Russia or Turkey, logistics needs to be worked out, and in this case, some variation in price is possible, and decision will be made in McDonald’s head office, then they’ll make an offer. However, I think, there is an issue with royalty as well. Those, who should enter into a contractual relationship here through franchising, as McDonald’s organizers, they should also gain enough benefit, and upon some marketing surveys, there are some problems in this sector, volumes are not that big. I’m conscious that in the coming 1-2 years McDonald’s won’t appear in Armenia, if not policy decision,” Sukiasyan said.

What will McDonald’s change in Armenia? Firstly, the businessman mentioned culture, representation of McDonald’s brand in Armenia, as well as the circumstance, that as a food network, it’ll bring easiness, “Yes, it’ll have some impact, and definitely McDonald’s will have quite a primary role and place. Pricing policy, present-day average salary, marketing should be performed by institutes, and inform which part of the market it’ll possess.”

He also noted that there isn’t any hindrance from RA authorities in this regard. “It was pleasant to me, that Armenia is such a free country that even a Georgian thinks of having McDonald’s representation in our country,” he said.

Touching upon existent McDonald’s working conditions Kh.Sukiasyan stated a few advantages: geological position, availability of 5 million population and etc. “However, I don’t consider Georgia’s McDonald’s is comparable with Russia or any other big country. It’s clear, that it’s a small body, in Russia they exist in hundreds. That’s why I suppose Georgia’s responsible was sure, that Armenia and Georgia will be regarded as one body from the standpoint of volume, however, logistics needs to be worked out. But I don’t think McDonald’s head office thinks the same way.”

By Gayane Khachatryan