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Cover Story

Catering to the Masses
What an absolute contrast to the rest of Moscow. Dour, downcast people on the streets and in the metro, bars where it was hard to get the attention of the staff, never mind a seat or a drink; shops where, heavens forbid, you would interrupt the staff to actually try and buy something.
By John Bonar

Back in 1994, walking the long dark route with poor lighting and darkened windows that was then Tverskaya Street, from the Palace Hotel (now the Sheraton) to Red Square, one lonely neon beacon heralded the advent of the new hospitality scene. American Bar & Grill trumpeted the oval sign on a side street off Mayakovsky Square (now Ploschad Triumfalnaya). On my first visit to Moscow this became my reference point. Pushing through the swing doors you were engulfed by a warm welcoming atmosphere. A smiling hostess, attentive barmen and eager to please wait staff: all desperate to practice their English on visiting foreigners.

American Bar and Grill was a new creation of RosInter Group. Add the reasonably priced, generously portioned and appetizing range of food they served up and you have a formula for success.

The fact that they are still operating to the same high standards and still packed to the gills is a tribute to the vision of the founder, Venezuelan businessman Rostislav Ordovsky-Tanayevsky Blanco, who has made the companys mission to care that, Our guest must be pampered so they enjoy and return to our restaurants. Our employees must be motivated to serve with a smile, a core value of his company.

The remarkable thing is that over 12 years later it is still operating to the same customer friendly standards.

Little wonder then that the American Bar and Grill at Mayakovksky, or Ambar, as it is affectionately known by its loyal horde of customers, remains a flagship outlet for RosInter and generates revenues per square meter that are among the highest in the industry, worldwide. While retaining a core customer base of expatriates, the restaurant now is filled seven days a week with the growing middle class of Muscovites.

The company has been one of the key players contributing to the development of western standards of service and eating- out culture in new Russia. Rostislav, as he is known throughout the industry, started with a Spanish food restaurant in the center of Moscow in 1990, El Rincon Espanol, and his restaurant business evolved, gradually expanding its borders from a single outlet in the center of Russias capital to a network of several chains of popular brands operating in 24 cities across Russia, the CIS and East Europe. There are over 280 restaurants in the group today.

Rosinter Restaurants Holding, which is expected to go public with $100 million plus IPO in May, operates restaurants in Russia, Ukraine, Belorussia, Kazakhstan, Czech Republic, and Hungary. It owns the brands Il Patio, Planet Sushi, 1-2-3 Cafe, Moka Loka, Pechki-Lavochki, Patio Pasta, Cafe des Artistes, American Bar&Grill and El Rincon Espanol and has the right to open restaurants under the trademarks of Sibirskaya Korona, T.G.I. Friday's and Benihana of Tokyo. With President Lori Daytner holding a Public Relations degree from Slippery Rock University, the group is regularly updating the image of its chains. While stand-alone restaurants Santa Fe and Caf des Artists in Moscow have a popular following, the emphasis in development lies on the groups inhouse developed chains such as Il Patio, Rostiks KFC and Planet Sushi, with the recently developed Caf 1-2-3 Russian fare chain fast catching on.

The deal with Yum! Brands of the USA in 2005 for the co-branding of RosInters Rostiks fried chicken chain with KFC was seen as so crucial to future growth and success that one of RosInters key executives, Henrik Winther, was drafted in to head the enterprise which is a ring-fenced operating unit within the holding. KFC had had a number of franchisors in Russia and failed to achieve their expected results. Franchisors were late in opening KFC branches in Moscow and were slow to develop new restaurants, while Rostiks went from strength to strength with their happy chicken holding a knife and fork becoming ubiquitous in high streets and shopping mall food courts.

The first remodeled Rostiks, a 364-seat outlet round the corner from Ambar on Mayakovsky, opened in June 2006. The plans are for all 12 KFC outlets in Russia and all 100 Rostiks to be remodelled by the end of this year. The Dallas based Yum! has been talking about opening 300 co-branded restaurants in Russia.

Under the five year agreement inked in 2005, Yum! Brands have an option to buy 45% of the venture from RosInter, or simply continue the co-branding arrangement. Analysts expect Yum! to acquire a strategic stake in RosInter through the IPO.

The consumer business is the fastestgrowing industry in Russia, a market from 143 million people that analysts say has doubled in the past 10 years and will double again in the next five years. Russian retail sales grew 13 percent to $329 billion in 2006, with Muscovites accounting for one-third of that, government data show.

Rosinter, which posted a 2006 turnover of $205 million, up 30 percent over 2005, owns or operates over 200 eateries in Russia and the former Soviet republics under seven brands, including T.G.I Friday's, Santa Fe, Il Patio and Planet Sushi.

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