Why is McDonald’s selling its Russian businesses? Fast food chain reiterates “our commitment to our values”
Three decades after opening its first Moscow store, McDonald’s is looking for a buyer for all 850 Russian restaurants as it prepares to exit the country.
On Monday McDonald’s confirmed that it had begun to sell off Russian businesses in response to the Russian invasion of Ukraine in late February. The fast food giant maintains 850 restaurants, comprising 62,000 staff, but become the latest western company to leave Russia.
Back in March the company confirmed that it was temporarily closing all its stores in Russia, but that it would continue to pay employees. However that situation was unsustainable in the long term and McDonald’s has now announced that it is seeking a Russian buyer to hire those workers as part of any sale.
CEO Chris Kempczinski thanked Russian employees and suppliers for their “dedication and loyalty to McDonald’s” but reiterated his belief in the company’s decision.
“We have a commitment to our global community and must remain steadfast in our values,” Kempczinski wrote in his statement, “and our commitment to our values means that we can no longer keep the arches shining there.”
Who is McDonald’s selling Russian stores to?
The statement confirmed that McDonald’s intends to find a local buyer for the business, which will include all physical premises, with the hope of securing continued employment for all involved.
The expansion into Russia was a hugely profitable one for the brand but the withdrawal is expected to bring significant financial costs, with McDonald’s predicting a charge against earnings of between $1.2 billion and $1.4 billion as a result.
The humanitarian crisis in Ukraine has sparked McDonald’s into action, withdrawing from a massive market that it first entered more than three decades ago. The first McDonald’s in Russia was opened in 1991, just after the fall of the Berlin Wall, and was a symbol of the thawing of tensions between the two Cold War super-powers
Kempczinski’s statement reads: “Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is surely the right thing to do. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine the Golden Arches representing the same hope and promise that led us to enter the Russian market 32 years ago.”
The first Russian McDonald’s opened in Moscow and the symbolic removal from the country after 31 years is a direct response to the Kremlin’s actions. The fast food corporation become the latest United States food and drink company to withdraw or pause business activities in the country, after Coca-Cola, Pepsi and Starbucks.
McDonald’s says that the withdrawal will include the removal of all branding and marketing from Russia, including the iconic golden arches and company signs. It will, however, maintain the associated trademarks in Russia.