McDonald’s is quitting Russia after 32 years in the country

Business Insider

McDonald’s is quitting Russia after 32 years in the country, citing the ‘humanitarian crisis’ caused by the Ukraine war

Kate Duffy and Grace Dean – May 16, 2022

A McDonald’s restaurant in Tver, Russia.FotograFFF/Shutterstock
McDonald’s is quitting Russia after 32 years in the country, citing the ‘humanitarian crisis’ caused by the Ukraine war

McDonald’s said Monday it’s quitting Russia after more than 30 years in the country.

The fast-food giant paused operations in Russia in March, shortly after the Ukraine invasion began.

McDonald’s said it would sell to a local buyer and “de-arch” all its restaurants in Russia.

McDonald’s announced Monday it’s quitting Russia after 32 years in the country because its business there is “no longer tenable.”

The fast food giant said: “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, nor is it consistent with McDonald’s values.”

McDonald’s opened its first restaurant in Russia in 1990, in Moscow. For many Russians, the opening of a McDonald’s restaurant — synonymous with capitalism and American culture — symbolized the impending collapse of the Soviet Union.

McDonald’s said Monday it will sell its Russian business to a local buyer and will “de-arch” all its restaurants in the country, meaning that the company’s name, branding, menu, and logo can’t be used.

Today, most McDonald’s restaurants in Russia are company-operated, but more than 100 are owned by franchisees, and some have refused to close. It’s a similar story with other Western fast-food chains, including Burger King, which said the operator of its 800 Russian restaurants “refused” to close them.

McDonald’s CEO Chris Kempczinski said Monday: “We have a long history of establishing deep, local roots wherever the arches shine. We’re exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald’s make today’s announcement 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.”

McDonald’s said it expected to record a non-cash charge of between $1.2 billion and $1.4 billion as a result of its Russia exit. It reaffirmed its prior 2022 financial outlook.

Russia invaded Ukraine on February 24 and on March 8, McDonald’s announced it was temporarily closing restaurants and pausing operations in Russia.

The company said Monday it had initiated the process to sell its Russian operations and was “pursuing the sale of its entire portfolio of McDonald’s restaurants in Russia to a local buyer.”

The company added it was “seeking to ensure the employees of McDonald’s Russia continue to be paid until the close of any transaction” and that “employees have future employment with any potential buyer.”

In a message to Russian franchisees, seen by The New York Times, Kempczinski said leaving the country was “a complicated issue that’s without precedent and with profound consequences.”

McDonald’s said in April it had lost around $100 million in wasted inventory after shutting its restaurants in Russia and Ukraine.

Russian news outlet RIA Novosti previously reported that a number of McDonald’s restaurants that were owned by franchisees remained open despite the Ukraine war.

Author: John Hanno

Born and raised in Chicago, Illinois. Bogan High School. Worked in Alaska after the earthquake. Joined U.S. Army at 17. Sergeant, B Battery, 3rd Battalion, 84th Artillery, 7th Army. Member of 12 different unions, including 4 different locals of the I.B.E.W. Worked for fortune 50, 100 and 200 companies as an industrial electrician, electrical/electronic technician.