- Becky Morton
- Business Correspondent, BBC
18 minutes ago
The fast food giant says it made the decision due to the “humanitarian crisis” and “unpredictable operating environment” caused by the Ukraine war.
McDonald’s has said it will permanently liquidate its business in Russia more than 30 years following entering the country and starting to sell its restaurants there.
This step comes following the company temporarily closed all its 850 outlets last March.
The fast food giant said it made the decision due to the “humanitarian crisis” and “unpredictable operating environment” caused by the Ukraine war.
The opening of the first McDonald’s restaurant in Moscow in 1990 was a symbol of the thaw in Cold War tensions.
One year later, the Soviet Union collapsed and Russia opened its economy to companies from the West. But more than three decades later, McDonald’s is one of a growing number of companies to withdraw from Russia.
“This is a complex issue like no other with dire consequences,” Chris Kempczynski, McDonald’s CEO, said in a letter to employees and suppliers.
“Some would argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is certainly the right thing to do,” he added.
“But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. It is impossible to imagine that the golden arches (McDonald’s logo) represent the same hope and promise that led us to enter the Russian market 32 years ago,” he added.
McDonald’s said it will sell all of its locations to a local buyer and begin the process of “arcising” restaurants, which includes removing its name, brand and menu. But it will keep its trademarks in Russia.
The chain said its priorities include seeking to ensure that its 62,000 employees in Russia continue to be paid until any sale is completed and that they obtain “future business with any potential buyer”.
McDonald’s said it would waive fees of up to $1.4 billion (£1.1 billion) to cover the exit from its investments.
picture released, Getty Images
The opening of McDonald’s in Moscow in 1990 saw queues of Russians eager to try the food offered by the American fast food chain.
The move comes following Renault announced that it is selling its business in the country. The French company said that its 68 percent stake in AvtoVAZ automaker would be sold to a Russian scientific institute, while its stake in Renault Russia would go to Moscow.
Moscow said Renault’s assets in Russia are now state property – the first nationalization of a major foreign company since the invasion of Ukraine.
Over the past year, Russia and Ukraine accounted for regarding nine percent of McDonald’s global sales.
The chain’s 108 restaurants in Ukraine remain closed due to the conflict, but the company continues to pay full salaries to all its employees there.
McDonald’s initially faced criticism for being slow to halt its business in Russia, and some called for a boycott of the company before it halted operations last March.
Hundreds of global brands, including Starbucks, Coca-Cola, Levi’s and Apple, have either left Russia or suspended sales there since the Russian invasion of Ukraine in February.
Other companies, including Burger King and Marks & Spencer, say they are unable to close stores due to complex franchise deals.
