The Burge chain will assume an associated non-cash charge of up to $1.4 billion.
McDonald’s Corp. became one of the biggest global names to leave Russia on Monday and planned to sell all of its restaurants after operating in the country for more than 30 years following its invasion of Ukraine.
The world’s largest burger chain, which owns about 84% of its nearly 850 restaurants in Russia, will take on a related non-cash charge of up to $1.4 billion.
McDonald’s decided in March to close its restaurants across the country, including the iconic Pushkin Square in central Moscow – a symbol of thriving American capitalism in the dying embers of the Soviet Union.
In early 1990s Russia, the burger chain became a way of sampling Western food and liquor for millions of people, even though the cost of a burger was many times the daily budget of many city dwellers.
“Some may argue that giving tens of thousands of ordinary citizens access to food and continued employment is certainly the right thing to do,” Chief Executive Chris Kempczinski said in a letter to employees. “But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”
Although the vast majority of stores in Russia are closed, some franchise stores have stayed open, benefiting from the skyrocketing popularity. It generated about 9%, or $2 billion, of its revenue from Russia and Ukraine last year.
Over the weekend, long lines were seen outside the restaurant at Leningrad Train Station in Moscow, one of the few branches in the capital still open, footage shared on social media showed.
McDonald’s said it intends to sell its restaurants in Russia to a local buyer but will keep its brands.
“Given the circumstances of the sale, the financial challenges faced by potential Russian buyers, and the fact that McDonald’s will not license its brand name or identity, it is unlikely that the sale price will even come close to the company’s pre-booking value.” invasion,” said Neil Saunders, managing director of GlobalData.
McDonald’s said it will ensure its 62,000 employees in Russia will continue to be paid pending the completion of a transaction and that they have future jobs with any potential buyer.
After McDonald’s decision to close stores in March, several American brands including Starbucks Corp., PepsiCo Inc. and Coca-Cola Co. followed suit, scrambling to comply with sanctions and deal with threats from the Kremlin that foreign-owned assets property could be confiscated.
“I wouldn’t be surprised if other companies followed McDonald’s lead and exited the market,” said Brian Yarbrough, an analyst at Edward Jones.
Earlier in the day, French carmaker Renault said it would sell its majority stake in Avtovaz to a Russian scientific institute.
