July 4, 2022

McDonald’s sells its Russian business

McDonald’s said Monday it has begun the process of selling its Russian business, which includes 850 restaurants that employ 62,000 people, making it the latest major Western company to exit Russia. Occupied Ukraine in February.

Pointing to the humanitarian crisis caused by the fast food company war, he said that having his business in Russia was “no longer acceptable, or even in line with McDonald’s values”.

The Chicago-based company announced it in early March Temporarily closes its stores in Russia But employees will continue to be paid. On Monday, it said a Russian buyer was seeking to hire the workers and pay them until the sale was completed. It does not identify a prospective buyer.

CEO Chris Kempsinsky said the “commitment and loyalty” to McDonald’s and the “commitment and loyalty” of hundreds of Russian suppliers had made a difficult decision.

“However, in our global community we have a commitment and must be firm in our values,” Kempczynski said in a statement, “Our commitment to our values ​​can no longer shine through.”

McDonald’s plans to remove gold arches and other logos and symbols bearing the company’s name as it seeks to sell its restaurants. It claims to have its trademarks in Russia.

James O’Rourke, managing professor at the Mendoza College of Business at the University of Notre Dame, said in an email that “this is the best in a series of tough exams.” “Under this arrangement, McDonald’s Russian employees will have a stable employment future, ordinary citizens will have a more familiar neighborhood for sandwiches and soft drinks, and will ‘de-archive’ 850 stores in Russia’s McDonald’s Corporation to secure some of its capital investment.”

The first McDonald’s in Russia opened three decades ago after the fall of the Berlin Wall in the center of Moscow. It was a powerful signal to ease 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 collapsed in 1991.


How effective were the sanctions against Russia?

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Other US food and beverage companies, including Coca-Cola, Pepsi and Starbucks, have decided to exit McDonald’s after suspending or closing operations in Russia in the face of Western sanctions.

Corporations ranging from British energy companies Shell and PP to French carmaker Renault have left Russia, reaching their bottom as they seek to sell their shares. Other companies have relied at least somewhat, and some are facing setbacks.

On Monday, Renault handed over its Russian assets to the Kremlin, and both parties announced that the embargo on Moscow’s military campaign in Ukraine would mark the first major nationalization since its inception.

McDonald’s said it expects to file a lawsuit against Russia for leaving between $ 1.2 billion and $ 1.4 billion.

Its restaurants in Ukraine have been closed, but the company says 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 owners – only about 5% are owned and operated by the company.

McDonald’s exit from Russia will not change its forecast for the addition of a net 1,300 restaurants this year, which will contribute 1.5% to the company’s total sales growth.

Last month, McDonald’s reported $ 1.1 billion in the first quarter, up from $ 1.5 billion a year earlier. Revenue was nearly $ 5.7 billion.