McDonald’s Updates: Following Russia’s invasion of Ukraine, McDonald’s has decided to quit the nation permanently after 30 years of trading. The fast food chain, which had 850 locations in Russia, has begun to sell up its locations.
“McDonald’s has concluded that continued ownership of the business in Russia is no longer tenable due to the humanitarian situation precipitated by the war in Ukraine, as well as the extremely unstable operational climate,” the company said.
The debut of McDonald’s in Moscow in 1990 was a watershed moment for the country, symbolising the end of the Cold War and Russia’s reintegration into the global community.
McDonald’s is one of many western businesses that have temporarily shuttered their stores in Russia as a result of Russia’s invasion of Ukraine, including Zara, H&M, M&S, Ikea, and Burberry.
MANY MERCHANTS DECIDING WHAT TO DO WITH THEIR RUSSIAN OPERATIONS WILL HAVE NOTICED MCDONALD’S DECISION TO MAKE THE CLOSURES PERMANENT.
“It is difficult to ignore the humanitarian disaster produced by the war in Ukraine,” McDonald’s CEO Chris Kempczinski wrote in a letter to staff. And it’s hard to picture the golden arches symbolising the same hope and promise that drove us to enter the Russian market 32 years ago.”
A priority for the company, according to Kempczinski, was ensuring that its 62,000 local employees were paid until a sale was agreed upon and they could obtain jobs with a new owner. He claims that McDonald’s controls the majority of its locations in Russia, but that because the company refuses to license its brand, the sale price will be nowhere like what it was before the invasion.
BEFORE THE WAR, RUSSIA AND UKRAINE ACCOUNTED FOR AROUND 9% OF MCDONALD’S REVENUE AND 3% OF OPERATING INCOME, ACCORDING TO SAUNDERS.
McDonald’s said it expects to take a charge against earnings of between US$1.2 billion and US$1.4 billion (NZ$1.9 billion-$2.2 billion) as a result of its exit from Russia. Although its restaurants in Ukraine are closed, the corporation claims to be paying full salaries to its staff there. McDonald’s operates in over 100 countries and has over 39,000 locations.
The majority are owned by franchisees, with the firm owning and operating only approximately 5%. McDonald’s stated that leaving Russia will not affect its plan to open a net 1300 outlets this year, contributing around 1.5 percent to overall sales growth. McDonald’s reported earnings of US$1.1 billion in the first quarter, down from US$1.5 billion a year ago. Revenue totaled about $5.7 billion.