McDonald’s Corporation announced it will exit the Russian market
McDonald’s Corp has announced it has initiated a process to sell its business in Russia after 30 years due to Moscow’s invasion of Ukraine.
McDonald’s in March closed all of its 850 restaurants in Russia where it says it employs 62,000 people, including its iconic Pushkin Square location.
It continued to pay its staff in the country.
The company said in a statement:
“After more than 30 years of operations in the country, McDonald’s Corporation announced it will exit the Russian market and has initiated a process to sell its Russian business.”
The company said it would seek to have a Russian buyer hire its employees and pay them until the sale closes.
It didn’t identify a prospective buyer.
McDonald’s said it plans to start removing golden arches and other symbols and signs with its name.
As part of the exit, McDonald’s expects to record a non-cash charge of about $1.2 billion to $1.4 billion.
“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,” it said.
Chief executive Chris Kempczinski said the “dedication and loyalty to McDonald’s” of employees and hundreds of Russian suppliers made it a difficult decision to leave.
“However, we have a commitment to our global community and must remain steadfast in our values,” Mr Kempczinski said in a statement, “and our commitment to our values means that we can no longer keep the arches shining there.”
As The Daily Mail reported:
McDonald’s said it plans to start removing golden arches and other symbols and signs with the company’s name.
The first McDonald’s in Russia opened in the middle of Moscow more than three decades ago, shortly after the fall of the Berlin Wall.
It was a powerful symbol of the easing of Cold War tensions between the United States and Soviet Union.
McDonald’s was the first American fast food restaurant to open in the Soviet Union, which would collapse in 1991.
McDonald’s decision to leave comes as other American food and beverage giants, including Coca-Cola, Pepsi, and Starbucks have paused or closed operations in Russia in the face of western sanctions.
Corporations from British energy giants Shell and BP to French carmaker Renault have pulled out of Russia, taking a hit to their bottom lines as they seek to sell their holdings there.
Other companies have stayed at least partially, with some facing blowback.
McDonald’s said it expects to record a charge against earnings of between 1.2 billion dollars and 1.4 billion dollars over leaving Russia.
Its restaurants in Ukraine are closed, but the company said it is continuing to pay full salaries to its employees there.
McDonald’s has more than 39,000 locations across more than 100 countries.
Most are owned by franchisees – only about 5 percent are owned and operated by the company.
McDonald’s said exiting Russia will not change its forecast of adding a net 1,300 restaurants this year, which will contribute about 1.5 percent to companywide sales growth.
Last month, McDonald’s reported that it earned 1.1 billion dollars in the first quarter, down from more than 1.5 billion dollars a year earlier.
Revenue was nearly 5.7 billion dollars.
READ MORE: NEON NETTLE