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. Last Updated: 07/27/2016

Burger King Mulls Russia Franchise

bloombergPeople standing near a Burger King restaurant in Istanbul, Turkey, one of the chain's 11,100 outlets worldwide.
The world's second-largest fast-food company, Burger King, is set to enter the Russian market, Vedomosti reported Wednesday, citing unidentified sources.

The Miami-based giant, which has more than 11,100 restaurants worldwide, is negotiating with several Russian companies that are interested in opening Burger King eateries here, Vedomosti reported, citing sources familiar with the situation.

Coffee-shop chain Shokoladnitsa is the top contender for purchasing a master franchise, which would allow it to open Burger King restaurants in Russia, a fast-food executive told the paper. About 90 percent of Burger King restaurants are operated by franchisees, according to the company's web site.

Vladislav Lozitsky, general manager of Shokoladnitsa, which runs 49 cafes in Russia, declined to comment on the matter Wednesday. The chain, which reported 700 million rubles ($25.70 million) in turnover in 2005, plans to expand its network to 80 by the end of 2006, according to Lozitsky.

An unnamed Shokoladnitsa executive told Vedomosti that the Russian chain had held talks with Burger King. The terms were not disclosed during the meeting, the source said.

Burger King spokeswoman Lesly Hughes declined to comment on its Russia plans as the company is undergoing a quiet period after announcing plans to go public, she said by telephone from Britain on Wednesday.

The chain's parent company, Burger King Holdings, said Tuesday that it planned to sell 25 million shares -- around 19 percent of the company's stock -- at a price of up to $17 each, which would value Burger King at about $2.25 billion, The Associated Press reported.

Russia's fast-food market is growing at a rate of more than 20 percent per year, which is comparable to China's, Khamzat Khasbulatov, McDonald's president in Russia and Eastern Europe, said earlier this year.

Average monthly per capita spending on eating out increased from $18.80 in 2004 to $23.60 in 2005, according to the results of a poll of Russian cities conducted by research company Comcon.

McDonald's, the world's largest fast-food chain, was the first Western chain to enter Russia. It opened its first outlet near Pushkin Square in 1990.

The U.S. giant plans to invest over $50 million in expanding and upgrading its network of 147 restaurants in Russia.

Another global fast-food brand, KFC, signed a partnership agreement with local fried chicken chain Rostik's last summer. Some 96 Rostik's eateries operating across Russia will become joint Rostik's-KFC locations by 2007.