McDonald’s to sell its business in Russia after 30 years


Source: The Guardian

Fast food chain’s boss says presence is no longer ‘consistent with its values’ after invasion of Ukraine.

McDonald’s is to sell its business in Russia, after 30 years of operating its restaurants in the country, in the light of Moscow’s war on Ukraine.

The fast food operator said the humanitarian crisis caused by Russia’s invasion and the unpredictable operating environment meant continuing running restaurants in the country was “no longer tenable” or “consistent with McDonald’s values”.

The company intends to “de-arch” the outlets, removing the McDonald’s name, logo, branding and menu, before they are sold to a local buyer – the first time it has taken such measures in a major market. It will, however, retain its trademarks in Russia, where Chris Kempczinski, the chief executive of McDonald’s, said the company “embodied the very notion of glasnost”.

McDonald’s said a priority was making sure that 62,000 local employees continued to be paid until a sale had been agreed and that they could get jobs with a new owner.

Thousands of people gather in Pushkin Square, Moscow, on 31 January 1990 for the opening of the first McDonald’s in the Soviet Union.
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Kempczinski said the “dedication and loyalty to McDonald’s” of those employees and local suppliers made the announcement of the sale “extremely difficult”. He added: “However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there.”

In a letter to employees, he said: “It is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine the golden arches representing the same hope and promise that led us to enter the Russian market 32 years ago.”

The planned sale comes after McDonald’s said in March that it was temporarily closing its 850 restaurants in Russia, including its site in Pushkin Square in Moscow, which was the first in the country.

When the store opened on 31 January 1990, thousands of people lined up for hours to taste the Big Mac, a symbol of American capitalism.

The Chicago-based company owns 84% of its stores in Russia, and has said that its restaurants there and in Ukraine contributed 9% of its annual revenue, or about $2bn (£1.6bn). The restaurants in Ukraine remain closed and McDonald’s said it continues to pay full salaries for its employees there.

As part of the exit, the company expects to record a non-cash charge of between $1.2bn and $1.4bn.

“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable,” McDonald’s said.

Its sale of its Russian business comes after numerous western brands have temporarily or permanently closed down operations in the light of the invasion of Ukraine.

Starbucks, Coca-Cola and Pepsi have paused operations in Russia, as have consumer brands including Netflix, Levi’s, Burberry, Ikea and Unilever, the owner of Marmite and Ben & Jerry’s.

Companies around the world have been scrambling to reassess their links with Russia after the US, EU and UK sought to isolate it economically with sanctions.

Sanctions have also made it illegal for US, EU or UK companies to serve some of the biggest Russian businesses, including banks such as Sberbank, Gazprombank and VTB.