- McDonald’s will temporarily close 850 locations in Russia, nearly two weeks after Russian forces invaded Ukraine.
- The fast-food giant had taken heat for staying silent on the war.
- McDonald’s has long played a symbolic role in Russia, opening its first Moscow location months before the Soviet Union collapsed.
McDonald’s, citing “the needless human suffering unfolding in Ukraine,” announced Tuesday it will temporarily close 850 locations in Russia. The decision came nearly two weeks after Russian forces invaded its ex-Soviet neighbor.
CEO Chris Kempczinski wrote in a letter to franchisees and employees that the chain will pause all operations in Russia. However, it will continue to pay its 62,000 Russian employees, and its Ronald McDonald House Charities will continue to operate.
Later Tuesday PepsiCo, Starbucks and Coco-Cola announced similar step-backs from the country.
In recent days, McDonald’s has drawn criticism for staying silent on the war, given its relatively large Russian footprint. McDonald’s restaurants in Russia and Ukraine account for 2% of its systemwide sales, roughly 9% of its revenue and 3% of its operating income.
McDonald’s has long played a symbolic role in Russia as well. The chain opened its first location in the Soviet Union 32 years ago in Moscow, months before the state collapsed.
“In the thirty-plus years that McDonald’s has operated in Russia, we’ve become an essential part of the 850 communities in which we operate,” Kempczinski wrote in his letter. “At the same time, our values mean we cannot ignore the needless human suffering unfolding in Ukraine.”
About 84% of McDonald’s Russian locations are owned by the company, while the rest are operated by franchisees. Owning more of its restaurants generates greater revenue for the company, but opens it up to greater risk in times of turmoil or economic downturn.
Kempczinski said it is impossible to predict when McDonald’s would be able to open its Russian restaurants. The company is experiencing supply chain disruptions and other operational challenges.
He also said McDonald’s is paying full salaries for Ukrainian employees and has donated $5 million to its employee assistance fund. The company is monitoring the humanitarian situation as well.
McDonald’s announcement comes after Yum Brands said it would suspend restaurant development and investment in Russia. The KFC owner has more than 1,000 restaurants in Russia that account for roughly 2% of its systemwide sales.
Starbucks hasn’t yet paused any of its Russian operations, where all of its cafes are run by franchisees. The coffee chain has about 130 locations across Ukraine and Russia. However, CEO Kevin Johnson condemned the Russian attack on Ukraine and vowed to donate royalties from its Russian business to humanitarian causes in Ukraine.
Source: Business - cnbc.com
