The towers and passers-by of the Kremlin are reflected in the window of a closed McDonald’s restaurant in Moscow on May 16, 2022.
Natalia Kolesnikova | AFP | Getty Images
MC Donalds said Thursday it had reached an agreement to sell its Russian assets to its current market licensee, Alexander Govor.
Govor will acquire all McDonald’s locations in Russia and manage them under a new brand. It also agreed to retain employees for at least two years, on equivalent terms, and to fund the salaries of corporate employees working in 45 regions of the country until the agreement is closed and existing liabilities to suppliers, owners and public services .
Financial terms of the deal were not disclosed.
MC Donalds said Monday which expects to have a non-monetary charge of between $ 1.2 billion and $ 1.4 billion in relation to its net investment in Russia and foreign exchange losses.
The sale is expected to close in the coming weeks if it gets regulatory approval. It marks the end of an era for the fast food giant, which first entered the country just months before the Soviet Union dissolved.
“McDonald’s in Russia embodied the very notion of glasnost and took on immense significance,” CEO Chris Kempczinski wrote in a letter to the McDonald’s system Monday after the company announced its intention to sell.
In the three decades since the opening of its first Moscow office, McDonald’s had expanded its business in Russia to approximately 850 locations. The company owned about 84% of those restaurants, while the rest were run by franchisees. Owning more of its restaurants generates more revenue for the company, but exposes it to greater risk in times of economic turbulence or recession.
In early March, after the Kremlin invaded Ukraine, McDonald’s said it would temporarily close its Russian offices. The company said in late April that the suspension of its operations in Ukraine and Russia was due to the cost of the war of $ 127 million during the first quarter. And on Monday, he revealed he was planning to sell the business.
“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,” Kempczinski said in his letter.
Other Western companies are also opting to sell their Russian assets, including carmaker Renault and the oil giant Exxon Mobile.
Govor operates 25 McDonald’s locations in Siberia and has been a licensee of the fast food chain since 2015.