McDonald’s said Monday it has begun the process of selling its Russia business, which includes 850 restaurants and employs 62,000 people, making it the latest major Western company to exit Russia since then..
The fast food giant pointed to the humanitarian crisis caused by the war, saying that sticking with its business in Russia was “no longer defensible, and incompatible with McDonald’s values.”
The Chicago-based company announced in early March that it isBut it will continue to pay employees. On Monday, it said it would seek to hire a Russian buyer these workers and pay them until the sale closes. No potential buyer has been identified.
CEO Chris Kempczynski said the “dedication and loyalty to McDonald’s” to employees and hundreds of Russian suppliers made the decision to leave difficult.
“Nevertheless, we have a commitment to our global community and must remain steadfast in our values, and our commitment to our values means we can no longer maintain the brightness of the arcs there,” Kempczynski said in a statement.
McDonald’s, as it tries to sell its restaurants, said it plans to begin removing golden arches and other symbols and signage bearing the company’s name. She said she would keep her trademarks in Russia.
“This was the best of a series of tough choices,” James O’Rourke, professor of management at the University of Notre Dame’s Mendoza School of Business, said in an email. “Under this arrangement, McDonald’s Russian employees will have a stable career future, ordinary citizens will have a mostly familiar place to eat a sandwich and a soft drink, and by “removing the bracket” of 850 stores in Russia, McDonald’s will protect the brand and recover at least some of its capital investment.
The first McDonald’s in Russia opened in central Moscow more than three decades ago, shortly after the fall of the Berlin Wall. It was a powerful symbol for relieving Cold War tensions between the United States and the Soviet Union.
McDonald’s was the first American fast food restaurant to open in the Soviet Union, which would collapse in 1991.
McDonald’s decision to leave comes as other US food and beverage giants, including Coca-Cola, Pepsi and Starbucks, have temporarily halted or closed their operations in Russia in the face of Western sanctions.
Companies from British energy giants Shell and BP have pulled out of French carmaker Renault, hurting its bottom line as it seeks to sell its holdings there. Other companies have stayed at least partially, with some facing a backlash.
On Monday, the French news agency AFP said Renault handed over its Russian assets to the Kremlin “in the first major nationalization since the start of sanctions against Moscow’s military campaign in Ukraine.”
McDonald’s said it expects to post a fee for profits of between $1.2 billion and $1.4 billion on leaving Russia.
Its restaurants in Ukraine have been closed, but the company said it continues to pay full salaries to its employees there.
McDonald’s has more than 39,000 locations in more than 100 countries. Most are owned by franchisees – only about 5% are owned and operated by the company.
McDonald’s said the exit from Russia would not change its forecast of adding 1,300 net restaurants this year, which would contribute about 1.5% to sales growth company-wide.
Last month, McDonald’s reported that it earned $1.1 billion in the first quarter, down from more than $1.5 billion a year earlier. Revenue was approximately $5.7 billion.
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