Column

One man's optimism for Russia's future

Diane Francis January 25 1999
Column

One man's optimism for Russia's future

Diane Francis January 25 1999

One man's optimism for Russia's future

Column

McDonald’s George Cohon says the media ‘spends too much time thinking about the Mafia stuff’

Diane Francis

Much is written about Russia's current woes, such as the collapse of the ruble and the proliferation of Russian gangsters who, some police agencies estimate, control most of Russia's economy. The ruble collapse followed Russia's default on its debts despite billions of dollars' worth of aid from the International Monetary Fund. Such

a currency calamity will make it difficult, if not impossible, for Russian governments to borrow or to attract foreign investment for ages. Worse than that, not only were foreign investors burned by the default and collapse but so was Russia’s middle class, many of whom lost their savings in Russian banks that went bust as a result.

While that is depressing, the country is not doomed, according to Canada’s foremost business expert on Russia, George Cohon, senior chairman of McDonald’s Restaurants of Canada Ltd. and McDonald’s in Russia. Russians are still better off than ever before, Cohon told me recently. He travels there several times each year and knows just about everyone, from President Boris Yeltsin and former Soviet leader Mikhail Gorbachev to prominent business people.

Cohon brought McDonald’s to Canada from the United States in the late ’60s, then took the business to the then-Soviet Union, opening the first McDonald’s in Moscow in 1990. Now, there are more than 1,000 McDonald’s in Canada and 49 in Russia. Says Cohon: “Moscow is hustling and bustling. You wouldn’t believe the hotels that have been built or the restaurants. They’re not as full as before, but they’re still there. I don’t think there will be political unrest or that they’ll go back to communism. The train has left the station and they are just going through some tough travelling.” Intangible benefits now enjoyed by the Russians should not be underestimated in terms of what it means to the average person’s lifestyle. Millions travel at will. There are no more gulags or government goons. “Isn’t it great,” says Cohon, “that millions of Russians now are travelling to other parts of the world. Isn’t it nice that there are now elections. We forget they were a superpower and have a lot of nuclear weapons and there’s disarmament now and they aren’t aiming those weapons at us.”

Many Russians are employed by foreign companies such as McDonald’s and are catching on to the efficiencies and work ethic of the West. Observes Cohon: “It’s fascinating that many of McDonald’s 6,500 employees in Russia are the sole wage earner for their families. You have a 25-year-old supporting his mother and father. Mother might be a schoolteacher and father a doctor, but the main wage earner is a McDonald’s employee.”

In fact, Cohon says his store managers make more money than Yeltsin. “On a tour of our operations in 1993,” Cohon recalls,

“Yeltsin met one of our store managers and asked, ‘How long have you been here?’ He then asked me, What does she earn?’ I said, ‘She started as crew,’ and he got mad at me. ‘I didn’t want the history. What does she earn?’ I told him, and he said, ‘I’m the president of the country, and she earns more than me.’And I said, ‘But she’s got a very tough job.’ ”

On a recent trip to Moscow, Cohon chatted with a crew person, only to find out that the young man was a rocket scientist. The young man was excited at the career possibilities at the restaurant chain and thoroughly uninterested in his chosen career where paycheques were non-existent.

Cohon believes the criminal element will be brought to heel as people begin to demand law-and-order candidates in future elections. Headlines exaggerate the situation, he says. “The media spends too much time thinking about the Mafia stuff,” says Cohon. “It was unheard-of before and makes for interesting reading. But we can’t be obsessed with that darker side of the place only. There is a brighter side.”

McDonald’s, for one, continues to flourish. “I was there six or seven times last year, and we’re doing fine,” he says. “We’ve been in there for a long time. We survive because McDonald’s always adapts to the changing economic climate. We survived Brazil, are surviving Japan and now Russia.”

With its ruble profits, McDonald’s has built three large office buildings in and around Moscow, which are rented out to foreign multinationals and individuals. The fast-food chain still plans to open 13 more Russian restaurants this year, somewhat scaled down from pre-crisis expansion plans of 20 openings in 1999. “I look at it as one step forward, two backwards during this time,” says Cohon. “If you’re in for the long haul and you’re ruble-based and want to take control of the marketplace, which we do, then we’re going to weather this thing. Well tighten our belt.

“McDonald’s is in 114 countries all over the world. In Russia, we are careful about raising our prices. We have to put a few local things on the menu, which we’re working on. We’re still profitable and make millions of dollars there.”

Cohon may simply be a cockeyed optimist, but his enthusiasm about Blussia helped him overcome enormous obstacles. The Moscow opening made world headlines and became the most highprofile example of change under way there. “It’s demeaning for Russia, after being a world power, to beg for support and help,” he says. “There’s an expression, ‘Don’t give us a fish, but teach us how to fish. Then we can fish ourselves.’

“We have to be patient, too. Russia is not even close to capitalism. It’s not free enterprise yet. But it’s better than it was 10 years ago for the average person.”