The first McDonald’s opened in Russia in 1990. On Monday, the company announced that after invading Ukraine it would leave the country and sell its Russian business.
The Associated Press reported:
The company, which operates 850 restaurants and employs 62,000 people in Russia, drew attention to the humanitarian crisis caused by the war and said doing business in Russia “is now inconsistent with McDonald’s values”.
In early March, the Chicago fast food giant said it was temporarily closing its stores in Russia but would continue to pay its employees. McDonald’s said on Monday it would look for someone to hire employees and pay them until the trade closes, without specifying a potential buyer from Russia.
CEO Chris Kempchinski said his employees and hundreds of Russian suppliers decided to leave because of their “devotion and loyalty to McDonald’s”.
“However, we have obligations to our global community and we must stay true to our values,” Kempczynski said in a statement. “Our commitment to our values ​​means we can no longer shine the belts there.”
In an attempt to sell its restaurants, McDonald’s said it plans to begin removing gold belts and other symbols and signs of the company name. The company said it will keep its trademarks in Russia.
Soviet customers line up in front of the newly opened McDonald’s in the Soviet Union on Moscow’s Pushkinskaya Square on January 31, 1990. (Photo by VITALY ARMAN/AFP via Getty Images)
Western companies struggle to stay stuck in Russia, drawing profits from suspending or shutting down operations in the face of sanctions. Others remained at least partially in Russia, and some faced backlash.
French automaker Renault said Monday it will sell a controlling stake in Russian automaker AvtoVAZ and a Moscow plant in the province.
Russia’s first McDonald’s restaurant opened in the heart of Moscow more than three decades ago, shortly after the fall of the Berlin Wall. It was a powerful symbol of the easing of tensions in the Cold War between the Soviet Union, which collapsed in 1991, and the United States.
According to analysts, the company’s departure symbolizes a new era.
“His departure represents a new kind of isolationism in Russia that must now seek local investment and consumer brand development,” said Neil Saunders, managing director of GlobalData, an enterprise analytics firm.
TOPSHOT. Women walking in front of a McDonald’s restaurant in the center of Moscow on March 9, 2022. – (AFP photo)
He said McDonald’s owns most of its restaurants in Russia, but because it has not licensed its brand, the selling price is unlikely to be close to the value of the business before the raid. Saunders said Russia and Ukraine accounted for about 9% of McDonald’s revenue and 3% of operating income before the war.
McDonald’s said it expects to impose a fine of between $1.2 billion and $1.4 billion for leaving Russia.
Its restaurants in Ukraine are closed, but the company says it continues to pay its employees full wages.
McDonald’s has more than 39,000 locations in over 100 countries. Most of them are owned by franchisees – only about 5% are owned and operated by the company.
McDonald’s said the exit from Russia will not change its forecast for expansion to 1,300 stores this year, with the company seeing a growth of about 1.5% in sales.
McDonald’s reported last month that it earned $1.1 billion in the first quarter, up from $1.5 billion last year. Revenue was approximately $5.7 billion.
