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Russia Gets First Taste of Taco Bell in Trial Run : Fast food: Burritos, hot dogs, sausages and Pepsi are sold from pushcart at Moscow subway stop. Pepsico hopes to expand locations but won't open a store.

June 11, 1993|GREG JOHNSON | TIMES STAFF WRITER

IRVINE — Moscow residents who ride the Russian city's subway were greeted Thursday by a flash of red, white and blue: a pushcart dispensing Taco Bell burritos, hot dogs, sausage and Pepsi-Cola.

Pepsico Inc. and its Taco Bell subsidiary in Irvine are following the lead of McDonald's Inc., which introduced its popular line of fast food to Russians three years ago.

"Early reports indicate that the pushcart was incredibly popular," said Zane Leshner, Taco Bell's senior vice president of operations. "The Russians were fascinated with the burritos."

The cart eventually will stock other Pepsico products, including Kentucky Fried Chicken, slices from Pizza Hut and snack foods from Frito-Lay. Pepsico will send out 16 more carts during a test period to determine if there is enough consumer interest to expand the service to all of the subway's 149 stops, Leshner said.

The 3-by-9-foot carts at the Culture Park subway stop are designed to introduce Russians to Pepsico products, but Taco Bell "has no plans at this time to (open a store) in Russia," Leshner said. "Our experience with the (subway) will give us some important learning time and help us to understand what opportunities we have."

At first glance, the pushcarts seem to offer food at discount prices: a chili and cheese burrito costs 500 rubles (45 cents), while a Pepsi goes for 100 rubles (9 cents). However, "it's not a fair comparison because we've reconfigured the burritos so they're smaller than the U.S. version," Leshner said.

Taco Bell executives anticipate that eventually they will open outlets elsewhere in Moscow and across Russia. In the meantime, the carts, though they can serve about half as many people daily as a restaurant would, cost only 10% as much to operate.

Despite the fact that the average Russian salary is only about $25 a month, Taco Bell executives think that each cart will serve about 1,000 Muscovites a day.

"There is a significant portion of people here who do get well paid," said Bob Jenkins, Taco Bell's director of international field services. "We think they'll pay for a quality product."

Metro system officials in Russia's second-largest city, St. Petersburg, are observing the Moscow experiment, as are representatives of several other former Soviet cities with subways.

"The opening of markets in the former Soviet Union and Eastern Europe have created entirely new opportunities for Taco Bell," said Taco Bell President John Martin, who was in Toronto on Thursday to open Taco Bell's 4,000th restaurant. "Only recently have the people in these countries had the chance to sample the variety of foods the Western world has to offer."

Taco Bell, which operates in 16 countries, plans to expand in the Middle East, Central and South America and Poland. The company reported $3.3 billion in systemwide sales during 1992.

Parent Pepsico, based in Purchase, N.Y., has been a leader in doing business with the Soviet Union and its successor states, having opened its first Soviet Pepsi bottling plant in 1974.

The key to its longevity in this tough market may be its ability to find creative ways to make deals. Last year, for example, Pepsico signed a $1-billion agreement in Ukraine to open 100 Pizza Huts and to accept ships in exchange. The tankers, built in Ukraine with the soft-currency profits from selling pizza, will be resold in the West for hard currency.

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Times correspondent Beth Knobel in Moscow contributed to this story.

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