McDonald’s restaurants in Ukraine remain closed while the company continues to pay full salaries to its employees
McDonald’s restaurants in Ukraine remain closed while the company continues to pay full salaries to its employees
More than three decades after it became the first American fast-food restaurant in the Soviet Union, McDonald’s announced Monday that it has started selling its business in Russia, another symbol of the country’s increasing isolation from its war in Ukraine.
Noting the humanitarian crisis caused by the war, the company, which has 850 restaurants in Russia employing 62,000 people, said that holding on to its business in Russia “is no longer tenable, nor does it match McDonald’s values is compatible”. The Chicago-based fast-food giant said in early March it was temporarily closing its stores in Russia but would continue to pay its employees. Without naming a potential Russian buyer, McDonald’s said Monday it was looking for someone to hire its workers and pay them until the sale was completed.
CEO Chris Kemczinski said the “dedication and loyalty to McDonald’s” from employees and hundreds of Russian suppliers made leaving the company a difficult decision.
“However, we are committed to our global community and must remain steadfast in our values,” Kempczinski said in a statement, “and our commitment to our values means we can no longer keep the bows lit there.” While it tries its restaurants To sell, McDonald’s plans to remove gold arches and other symbols and signs bearing the company’s name. It said it would keep its trademarks in Russia.
Western companies have struggled to break free from Russia and have suffered the blow to their bottom line in the face of sanctions as they pause or close operations. Others have stayed at least partially in Russia, some are facing a setback.
French carmaker Renault said Monday it would sell its majority stake in Russian automaker Avtovaz and a factory in Moscow to the state – the first major nationalization of a foreign company since the war began.
More than three decades ago, shortly after the fall of the Berlin Wall, McDonald’s opened its first restaurant in Russia in the middle of Moscow. It was a powerful symbol of the easing of Cold War tensions between the United States and the Soviet Union, which would collapse in 1991.
Now the company’s exit is proving to be a symbol of a new era, analysts say.
“His departure represents a new isolationism in Russia, which must now look inward to attract investment and consumer brand development,” said Neil Saunders, managing director of GlobalData, a business analytics firm.
He said McDonald’s owns most of its restaurants in Russia, but since it won’t license its brand, the retail price likely won’t come anywhere near what the company was worth before the invasion. Russia and Ukraine combined accounted for about 9% of McDonald’s revenue and 3% of operating income before the war, Saunders said.
McDonald’s anticipates a $1.2 billion to $1.4 billion revenue hit from the Russian exit.
Restaurants in Ukraine are closed, but the company said it continues to pay full salaries to its employees there.
McDonald’s has more than 39,000 stores in more than 100 countries. Most are owned by franchisees – only about 5% are owned and operated by the company.
McDonald’s said the exit from Russia won’t change its guidance of adding 1,300 net restaurants this year, which will contribute about 1.5% to company-wide sales growth.
Last month, McDonald’s reported that it made $1.1 billion in the first quarter, compared to more than $1.5 billion a year earlier. Revenue was nearly $5.7 billion.
