More than three decades ago, McDonald’s became the first American fast food restaurant to operate in the former Soviet Union. But yesterday, McDonald’s began the process of unloading its business in Russia. The sell-off is another symbol of the country’s increasing isolation resulting from its war in Ukraine.
McDonald’s has 850 restaurants in Russia that employ 62,000 people. McDonald’s officials point to the humanitarian crisis caused by the war, saying holding onto its business in Russia “is no longer tenable [able to be defended], nor is it consistent with McDonald’s values.”
The Chicago-based fast food giant said in early March that it was temporarily closing its stores in Russia but would continue to pay employees. Without naming a Russian buyer, McDonald’s said yesterday that it would seek one to hire its workers and pay them until the sale closes.
The chain’s restaurants in Ukraine are also closed. The company continues to pay full salaries for its employees there as well.
CEO Chris Kempczinski says the “dedication and loyalty to McDonald’s” of employees and hundreds of Russian suppliers made it a difficult decision to leave. “However, we have a commitment to our global community and must remain steadfast in our values,” Kempczinski says. “Our commitment to our values means that we can no longer keep the arches shining there.”
As it tries to sell its Russia restaurants, McDonald’s plans to start removing golden arches and other symbols and signs with the company’s name.
Western companies have wrestled with extricating themselves from Russia. Many have endured hits to profits in order to keep from closing operations in the face of sanctions. Others have stayed in Russia at least partially, with some facing backlash from customers.
For McDonald’s, its first restaurant in Russia opened in the middle of Moscow more than 30 years ago, shortly after the fall of the Berlin Wall. 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 symbolic of a new era, analysts say.
“Its departure represents a new isolationism in Russia, which must now look inward for investment and consumer brand development,” says Neil Saunders, a corporate analyst.
McDonald’s has more than 39,000 locations across more than 100 countries. Franchisees own most of them. The corporation owns and operates only about 5% of the establishments.
Saunders says McDonald’s owns most of the restaurants in Russia. The sale price likely won’t be close to the value of the business before the invasion. Russia and Ukraine combined accounted for about 9% of McDonald’s revenue and 3% of operating income before the war, Saunders says.
McDonald’s expects to lose earnings of between $1.2 billion and $1.4 billion over leaving Russia. Still, officials say exiting Russia will not keep the company from adding about 1,300 restaurants elsewhere in 2022.
Do you think McDonald’s is making the right decision to pull out of Russia? Why or why not?
(The oldest of Moscow’s McDonald’s outlets opened on January 31, 1990. AP)
Well...IG that's a smart move
Well...IG that's a smart move on their part. It seems like McDonald's is trying to do the right thing, anyway. Putin and the gang sure are gonna wish they hadn't started their stupid war, now that their big macs are vanishing.
I was not expecting this... I guess it's just a chance for other
I was not expecting this... I guess it's just a chance for other fast food places to get a bit of business in Russia XDD
personally, I think McDonalds is doing the right thing. i like how they are still paying their employees to. it's not their fault that their contrary is going to war though some may support it most people in Russia probably don't want this.
Dose anyone not like
Dose anyone not like McDonalds?
I like McDonald’s
I love getting 2 Sausage Egg McMuffins and orange juice for breakfast! I am glad McDonald’s is doing that. Ronald McDonald would be pleased
I like the big M
I love McDonalds and im glad they are doing this I might not effect anything big other than the fact that Putin will realize he can't get his Happy Meal XD and the fact that he'll realize that the public aren't proud of what he's doing. Who knows McDonalds might hold a revolution of McNuggets in Russia lol
putin aint getting his chicken tendies no more
I've never had McDonald's...
I used to love it, but since lockdown started it's not been too appealing to me. I haven't had it in two years which is a shock to all my friends... xDDD
That is interesting. I think I tend to agree with what they are doing. The word "McDonalds" looks very interesting in Russian letters on the canopy in the picture! XD I agree with Hesperus D.
@Kiara: Nope, I don't like McDonald's. It is just a bunch of greasy fast food. I don't like hardly any fast food, for that matter, but I do like Chick-fil-A.
Well this is interesting.
I am not really a fan of McDonalds but that was because I threw up after eating McDonalds breakfast in China, not really their fault I used have an intolerance to acidic foods in the morning (orange juice was not a good idea), and we had just spent the night in a motel that smelled like smoke. But I felt sick all day, and have only had McDonalds a couple of times since then. Their ice cream is pretty good. I agree with Riley, Chick-Fil-A all the way, though I also enjoy In-and-Out once in a while.
Yeah I don't really like
Yeah I don't really like McDonalds but Chick-fil-A is pretty good! I surprised my friends by saying I've only had Taco Bell twice! (true fact) XD
I do like McDonald's fruit
I do like McDonald's fruit and yogurt things.
I am sorry you had that
I am sorry you had that experience @Abigail H :( I love Chick-Fil-A! I live on the West Coast so eating In-N-Out at the beach is the best!
I love In-n-Out too. Do you know that there's Bible verses on the bottoms of their cups? Cool, right?
Now Russia will be healthy
Now Russia will be healthy lol
I can not stand McDonald's.
I can not stand McDonald's. their food is terrible, chick-fil-a is better
I would go for chick-fil-a any day.