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McDonald's Corp. plans additional Russia investments to expand its business

US based food retail giant McDonalds Corp. is planning additional investments in its Russian business as it seeks expansion. The investment, to be undertaken in the next one year, is targeted at increasing McDonalds’ Russian foot print, to position the firm to benefit from Russia’s growing fast-food restaurant market amid still sluggish competition.

Speaking Wednesday, McDonald's Russia President Khamzat Khasbulatov, said the firm plans to open at least 40 new restaurants this year, and investments will be significantly higher than last year. McDonalds opened 31 eateries in Russia last year, bringing its total to 275, and invested an estimated over $174.2 million in openings and renovations, said Khasbulatov.

Khasbulatov was speaking during a press conference call, adding that McDonald’s priority for 2011 is the opening of new restaurants. According to him, if the firm gets the opportunity to open even more restaurants than it has planned; it has enough resources for that. Khasbulatov added that the group planned to expand its Russian chain by 15 per cent each year.

Khasbulatov said Russia was the group's most aggressively developing market in Europe, with a 140-million-plus population and the lack of a "big competitive struggle" underpinning potential of the market growth. Global retail and restaurant chains have been increasingly looking to expand in emerging markets like Russia, China and India, to tap opportunities that their large populations, growing middle-class and consumption provide.

McDonald currently has very limited competition in Russia. Its smaller rival Burger King entered the Russian market last year through a venture with a local partner but has yet to gain speed and weight in the highly fragmented market. However, McDonald has been in Russia since 1990. The company will open nearly 20 outlets in the Moscow and St. Petersburg regions in 2011 with the rest happening in European Russia, but the company also has its eyes on the eastern part of the country.

Khasbulatov noted that Russia is enormous; there are regions where McDonald is not yet present like West, Central and East Siberia — a region with population of more than 20 million.

McDonald's Corporation is the world's largest chain of hamburger fast food restaurants. McDonald's restaurants are operated by a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants.

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