While the total rise in prices observed in Azerbaijan is in connection with the increase of prices of oil products and communal services, McDonalds Azerbaijan restaurants have decided to cut prices 10-20% starting from 1 January 2007. The price rise for energy resources and communal services that was announced by the Tariff Council at the beginning of the week has not changed the Company's decision to reduce prices.
Magsud Mirzayev, the Managing Director of McDonalds Azerbaijan, explained to Trend there are two reasons for this decision. The first reason is linked to the company's logistics. The products are supplied to Baku in a ready-made form, excluding Coca-Cola soft drinks. For instance, potato products are delivered from the Netherlands, meat and milk products from Ukraine and condiments from Germany. The major supplier is the regional center of the company in Moscow. Thus, the company does not spend money on electricity for operation of its production technology lines.
The second reason is that the company is aware that it is not going to make any profit, but is eager to preserve its position in Azerbaijan which is regarded as a prospective market.
According to Mirzayev, in this regard Azerbaijan is unique within the Caucasus. McDonalds does not have any restaurants in Armenia, whilst only two exist in Georgia with no plans for expansion. The Chicago-based Central Office of McDonalds has allowed the Azerbaijani branch of McDonalds to build 3 more restaurants in Baku. It will bring the number of restaurants in Baku to 7. The location of the new restaurants is still to be determined.