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Pizza Hut Pulls Out of Moscow JV




When food supplies dwindled in the Russian parliament building during the 1991 coup attempt, President Boris Yeltsin called Pizza Hut delivery, according to Pizza Hut's web site. But if the president has any more cravings for a Deep Pan Supreme, he'll have to consider pelmeni instead.


Officials said Monday that after 10 years Pizza Hut is pulling out of its two-restaurant joint venture in Moscow with municipal company Mosrestoranservis.


The popular U.S. pizza chain, with worldwide 1997 sales of $4.7 billion, quit the restaurant on Kutuzovsky Prospekt on Aug. 1, and it will leave the Tverskaya Ulitsa site early next year, said Sergei Borovikov, general director at Mosrestoranservis, which holds a 51 percent stake in the joint venture.


Pizza Hut and Mosrestoranservis officials refused to comment on why the U.S. side had abruptly decided to pull out, saying only the joint venture agreement would run out at the end of this year.


"We no longer have leases and therefore we closed the restaurants. That is all we have to say about it," Jonathan Blum, senior vice president of Tricon Global Restaurants, which manages Pizza Hut, KFC and Taco Bell, said in a telephone interview from company headquarters in Louisville, Kentucky.


"We took a write-off in the fourth quarter of last year and closed down certain restaurants and refocused our international growth in a select number of high-growth potential markets across the globe," he added.


Analysts said it was unlikely that Russia's current financial crisis was playing any role in the decision.


"I think the reasons for that [withdrawal] are not on the surface," said Galina Ryltsova, a hotel and restaurant business expert at Arthur Andersen in Moscow.


"They had serious problems with Mosrestoranservis," said one source from a Moscow fast-food company who did not want to be identified. "They were arguing about the influence they must have in the venture, about the terms for the lease and about sharing the profits."


Borovikov said he was not aware of any problems between the two sides, adding that the Americans had decided last November to stop operating in Moscow.


Tricon's decision to leave Moscow does not affect the two Pizza Hut restaurants in St. Petersburg, which are franchises rather than joint ventures. The restaurants are run by the New Jersey-based firm Business Development International Inc.
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