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Russians queued for hours in Moscow when the first McDonald’s restaurant opened in 1990.
For many, it was the quintessential symbol of the end of the Cold War: in 1990, in Moscow’s famous Pushkin Square, thousands of Russians lined up for hours to try “the flavors of capitalism” for the first time: hamburgers and fries from McDonald’s.
“It was a symbol of freedom, it was a symbol of communism embracing capitalism, the Soviet Union embracing the West,” the BBC’s Russia editor Steve Rosenberg once recounted.
The opening of the first Golden Arches restaurant in Russia is a fact that several generations of Muscovites still remember as a sign that a new time was approaching their country: following years of communism, Russia was opening up to one of the most symbolic companies of American consumerism.
That era seems to have come to an end.
McDonald’s announced Monday that it will withdraw definitively of Russia and that it will sell its restaurants, more than two months following “temporarily” closing its 850 points of sale in the country following the beginning of the invasion of Ukraine.
In a message to staff and vendors, McDonald’s CEO, Chris Kempczinskisaid it was a complicated decision “that is unprecedented and has profound consequences.”
“Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is certainly the right thing to do. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine,” he said.
The presence of American multinationals such as McDonald’s or Coca Cola has generally been seen not only as a link with the West, but as a signal to investors regarding the state of the markets and the economy of the countries.
McDonald’s is the world’s largest restaurant company, with more than 37,000 points of sale in some 120 countries.
Kempczinski explained that the chain’s decision to sell its restaurants recognized “that things will not go back to normal” and that it was a symbol that “Russia and the West are going in two very different directions.”
“It is impossible to imagine that the Golden Arches represent the same hope and promise that led us to enter the Russian market 32 years ago,” he added.
Kempczinski predicted that in the near future, “many more international companies and global brands” will decide to permanently withdraw from the Russian market.
After the invasion of Ukraine, dozens of international companies announced that they would temporarily stop operating in Russia.
This Monday, the French car manufacturer Renault also announced that it would sell its factories in Russian territory.
image source, Getty Images
The firm said its 68% stake in automaker Avtovaz would be sold to a Russian scientific institute.
The Russian government said that Renault’s assets would now become state property, in what constitutes the first nationalization of a major foreign company since the invasion of Ukraine.
The retreat
McDonald’s announced that it will sell all of its sites to a local buyer and begin the process of “decommissioning” the restaurants, which involves removing its name, logo, and menu (although it will retain its trademarks in Russia).
The network said its priorities included trying to ensure that its 62.000 employees in Russia continued to be paid until any sale was completed and they had “future employment with any potential buyer”.
To cover the outflow of its investment, the company announced that it will write off a charge of up to US$1.4 billion.
Last year, Russia and Ukraine accounted for regarding 9% of McDonald’s global sales.
All 108 of the chain’s restaurants in Ukraine remain closed due to the conflict, but the company continues to pay full salaries to all of its employees there.
McDonald’s initially faced criticism for being slow to stop business in Russia, with some calling for a boycott of the company before it suspended operations in March.
Other firms, including Burger King and Marks and Spencer, continued operations, claiming they were unable to close stores due to complex franchise agreements.
Analysis by Theo Legget, BBC Business Correspondent
When McDonald’s opened a store in Moscow in 1990, it was deeply symbolic: an American cultural icon taking root in the heart of the decaying Soviet Union.
Now, it’s gone: yet another global brand leaving the country as Russia’s war in Ukraine transforms the Kremlin into an international pariah.
McDonald’s closed its Russian restaurants “temporarily” in March and now says staying in the country would not be consistent with its values.
But critics might point out that he only came to that conclusion following facing some criticism on social media for not speaking out once morest the war in Ukraine.
image source, Getty Images
Renault was also initially reluctant to abandon large investments in Russia, until Ukraine’s President Volodymyr Zelensky mentioned his name in a speech to the French parliament.
Now, both companies have bowed to the inevitable, which to many may be symbolic of a return to the harsh days of the Soviet Union.
Those heady days of the early 1990s, when Russia was opening up to the world, seem like ancient history.
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