US fastfood company Yum! Brands is intending to buy a stake in Russian fastfood chain Rostik’s, a key competitor of its mainstream brand KFC, according to the RIA Novosti news agency, which quoted a report in the daily Kommersant.
Sources close to negotiations suggest that the $18m to $30m deal could be sealed as soon as this week, the agency said. Both companies, however, declined yesterday to officially confirm these reports.
If the deal is successful, Yum! could eventually secure a strong bridgehead on the Russian market, given its 2003 promise to open at least 120 restaurants here through 2010.
Most KFCs opened here since the mid-1990s were unsuccessful, leaving Rostik’s dominating of the chicken fast food market segment. As Russian market researchers KOMKON put Rostik’s into the top five of fast food networks (10.1% of Russians say they eat there), KFC lags behind the top ten.
“Russia is an interesting market for KFC,” said Natalia Polishchuk, vice president of Delta Private Equity Partners, an investment fund. “The fast food market in Moscow alone is worth $700m to $800m per year, and it grows by 20% annually. KFC’s know-how plus Rostik’s infrastructure and venues could make a very successful alliance. And Yum! could tap into a ready big business, either.”
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By GlobalDataRostik’s, incorporated in 1993 and now comprising 73 venues in Moscow, Yekaterinburg, Samara, Kiev, Minsk and other cities, posted a turnover of $146m last year.
In Russia, Yum! operates mainly through franchises: the St. Petersburg-based Nitstsa Nord manages 11 KFC restaurants, Moscow-based American Restaurants and Sistema Bystrogo Pitaniya 2003 have two Pizza Huts, three KFCs and one Pizza Hut and Singapore-based Acma Technologies holds two Pizza Huts.
