McDonald’s took it one step further in its initial plan to close stores in Russia, undergoing a huge success in the process.
American fast food giant McDonald’s will completely pull out of the Russian market and sell its huge deals in the increasingly isolated country, the company said on Monday.
McDonald’s initially closed its 850 Russian branches when Moscow invaded Ukraine and offered the prospect that it might return. It continued to pay its 62,000 employees across the nation.
McDonald’s was one of the first Western brands to open in Russia and, in the 1990s, it was seen as a powerful symbol of Russia’s openness to the world.
But he said it will now begin “de-archiving” its stores in Russia in a move that is expected to cost the company around $ 1.4 billion ($ 2 billion).
Many Western companies temporarily withdrew from Russia after the invasion of Ukraine in February. But McDonald’s is the latest company to confirm that it has no plans to return as the war drags on and following revelations about Moscow’s cruelty to Ukraine.
French carmaker Renault also announced on Monday that it had divested its Russian assets to the Moscow government, marking the first major nationalization of the economic untangling.
McDonald’s confirmed on Monday that it has no plans to return to Russia.
“After over 30 years in the country, McDonald’s Corporation has announced that it will exit the Russian market and started a process to sell its Russian business, ”he said in a statement.
“The humanitarian crisis caused by the war in Ukraine and the plunging unpredictable operating environment have led McDonald’s to conclude that continued ownership of the business in Russia is no longer sustainable, nor is it consistent with McDonald’s values.”
He said he was seeking to sell “the entire portfolio of McDonald’s restaurants in Russia to a local buyer” in a move that is estimated to cost the company $ 1.2-1.4 billion (A $ 2.02 billion).
“The Company intends to initiate the process of” de-archiving “those restaurants, which involves no longer using the McDonald’s name, logo, brand and menu, although the Company will continue to maintain its brands in Russia.”
The company said it was trying to ensure its employees continued to get paid until a buyer was found and that they would be able to find a new job with whoever took over.
Russia, where McDonald’s directly manages over 80% of the restaurants bearing its name, accounts for 9% of the company’s revenue and 3% of its operating profit.
McDonald’s CEO Chris Kempczinski said, “We are exceptionally proud of the 62,000 employees working in our restaurants, the hundreds of Russian suppliers supporting our business and our local franchisees. Their dedication and loyalty to McDonald’s make today’s announcement extremely difficult.
“However, we have a commitment to our global community and we must stand firm in our values. And our commitment to our values means we can no longer make the Arches shine there. “
On February 24, Russian President Vladimir Putin ordered troops to enter Ukraine, triggering unprecedented Western sanctions against Russia and triggering an exodus of foreign companies including H&M, Starbucks and Ikea.
Authorities said they were ready to nationalize foreign operations – as happened with Renault – and some officials assured the Russians that their favorite brands would have domestic alternatives.
Moscow officials have tried to downplay the severity of Western sanctions, promising that Russia will adapt and take steps to stop the flight of foreign currency and capital.
Originally published as McDonald’s to completely exit the Russian market and sell their business