McDonald’s has announced that it will depart Russia permanently after more than 30 years and has begun selling its stores.
The action follows the temporary closure of 850 stores in March. The fast food behemoth claimed it made the decision because to the “humanitarian crisis” and “unpredictable operational environment” brought on by the Ukraine conflict. In 1990, the first McDonald’s restaurant opened in Moscow, symbolizing a thaw in Cold War tensions.
The Soviet Union disintegrated a year later, and Russia opened its economy to Western corporations. However, more than three decades later, it is one of an increasing number of companies withdrawing.
In a memo to employees and suppliers, McDonald’s CEO Chris Kempczinski said, “This is a hard subject with no precedent and deep ramifications.”
“Some could argue that continuing to employ tens of thousands of ordinary individuals while giving access to food is clearly the correct thing to do,” he continued. “However, the humanitarian situation generated by the war in Ukraine cannot be overlooked. And it’s difficult to picture the Golden Arches symbolizing the same hope and promise that drove us to enter the Russian market 32 years ago.”
We will be temporarily closing all restaurants and pausing all operations in Russia. Click to read the message from our CEO in its entirety: https://t.co/ncoB2A8GC6
— McDonald's (@McDonalds) March 8, 2022
McDonald’s announced that it would sell all of its locations to a local buyer and begin the process of “de-arching” the restaurants, which entails removing the company’s name, branding, and menu. In Russia, it will keep its trademarks.
The firm stated that one of its top concerns was to ensure that its 62,000 Russian employees were paid until the sale was completed and that they have “future employment with any potential buyer.” McDonald’s said it will write off up to $1.4 billion (£1.1 billion) in charges to finance the departure from its investment.
The action follows Renault’s announcement that it would be selling its operations in the country. The French company said it will sell its 68 percent stake in Avtovaz to a Russian science institute, while its shares in Renault Russia would go to Moscow. Renault’s Russian assets have now become state property, according to Moscow, marking the first significant foreign company to be nationalized since the invasion of Ukraine.
Russia and Ukraine accounted for around 9% of McDonald’s global sales last year.
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