After more than three decades in Russia, McDonald’s, an icon of US lifestyle and capitalism, is selling its businesses in Russia as it seeks to leave the country entirely.
The move is a significant departure for a brand whose growth around the world has become the symbol of globalism and even the basis of a theory of peace. As globalist aspirations have fractured in recent years due to the coronavirus pandemic and geopolitical tensions, the Russian invasion of Ukraine has forced many companies hoping to operate normally to act.
Under increasing pressure from employees and consumers, many brands and restaurant chains have partially or completely suspended their activities in Russia. But few have left entirely due to employee welfare concerns and difficulties returning after a departure. McDonald’s said in March which would temporarily close its operations there, as well as many other chains, including Starbucks and Yum Brands, the parent company of KFC and Pizza Hut. Many employees and activists have pushed for full resizing.
“This is a complicated issue, unprecedented and with profound consequences,” McDonald’s chief executive Chris Kempczinski wrote in a message to the franchises obtained by the New York Times.
He added: “Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is definitely the right thing to do. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine that the Golden Arches represent the same hope and promise that led us to enter the Russian market 32 years ago ”.
McDonald’s plans to sell its business to a local buyer. “De-arch” those restaurants, which means they will no longer use the McDonald’s name, logo or branding. MC Donalds said in a statement that its “priorities include trying to ensure that McDonald’s employees in Russia continue to get paid until any transaction is closed and that employees have future employment with any potential buyers.” It will keep its brands in Russia.
As a result of the move, Russia will record a $ 1.2 billion to $ 1.4 billion write-off and recognize “foreign currency conversion losses,” McDonald’s said in the statement.
McDonald’s entry into Russia began at the 1976 Olympics in Montreal, wrote Mr. Kempczinski in his franchise note, when the chain allowed the Russian Olympic team to use its Big Mac Bus. Fourteen years later, in January 1990, McDonald’s opened in Moscow.
“In McDonald’s history, it was one of our proudest and most exciting milestones,” wrote Kempczinski. “After nearly half a century of Cold War animosity, the image of the golden arches shining above Pushkin Square heralded for many, on both sides of the Iron Curtain, the beginning of a new era.”
McDonald’s, which has 39,000 restaurants in over 100 countries, has since invested billions of dollars in its supply chain and restaurants in Russia.
“This was not an easy decision, nor will it be easy to execute given the size of our business and the current challenges of operating in Russia,” wrote Kempczinski. “But the final state is clear.”