Like many restaurant executives with business interests in Russia and Ukraine, Rosinter Restaurants’ Richard Snead has been monitoring the news of turmoil in those countries for months.
Protests in Kiev starting in November turned deadly in February, bringing about the ouster of Ukraine’s president in February and this month’s annexation by Russia of the Crimea region, which voted to break away from Ukraine in a referendum contested by the United States and the European Union.
The risks this conflict poses to Western businesses were made more clear to Snead recently, as a Planet Sushi restaurant operated by Rosinter Restaurants a block from Kiev’s Independence Square “got trashed, to the point we couldn’t operate it anymore” in the middle of ongoing protests, he said.
“This is serious,” said Snead, who sits on the board of Rosinter, the Moscow-based franchisee of TGI Fridays, McDonald’s and several other brands. “Russia was on everybody’s ‘go-to’ list, and now it might be on a ‘stay-away’ list.”
Snead has nearly 20 years of experience opening and operating restaurants in the country, notably as the former president and chief executive of Carlson, who took the TGI Fridays brand to Russia in the 1990s.
His current concerns for operating in Russia and Ukraine include the instability of their economies and currencies, as well as their already idiosyncratic labor laws for Western executives that are likely to become more stringent. However, Snead’s biggest concern is what might result from any possible backlash to Western brands as the United States and European Union ratchet up the pressure on Russia through economic sanctions.
Russians, especially younger consumers, have been very open to spending money at brands like TGI Fridays, McDonald’s, KFC and Starbucks in Russia’s major cities, Snead said, but he worries that if their pride in Russia and anger at the West escalate, they might boycott Western brands, refuse to work for those chains or, worse, plan “something more sinister” like the damage wrought to Rosinter’s Kiev restaurant by rioting protestors.
“This is going to be a real interesting test,” Snead said. “It’s a very Western thing those young Russians are doing, drinking Starbucks coffee and spending twice as much as we pay for those same items. They’re in there late at night, smoking cigarettes and drinking coffee while playing on their iPhones, because it’s cool. It will be interesting to see if the Russian-pride factor makes Western brands not cool anymore or makes Russians hostile to them.”