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McDonald’s will sell its 850 restaurants in Russia

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More than three decades after becoming the first American fast food restaurant to open in the Soviet Union, McDonald’s said on Monday it had begun the process of selling its business in Russia, another symbol of the country’s growing isolation in because of his war in Ukraine.

The company, which has 850 restaurants in Russia that employ 62,000 people, highlighted the humanitarian crisis caused by the war, saying keeping its business in Russia is no longer tenable, nor in line with McDonald’s values.

The Chicago-based fast food giant said in early March it was temporarily closing its stores in Russia but would continue to pay its employees. Without naming a potential Russian buyer, McDonald’s said Monday it would seek one to hire its employees and pay them until the sale closes.

CEO Chris Kempczinski said the dedication and loyalty to McDonald’s employees and hundreds of Russian suppliers made the decision to leave difficult.

However, we have a commitment to our global community and must stay true to our values, Kempczinski said in a statement, “and our commitment to our values ​​means that we can no longer shine the arches there.

READ MORE: Once a post-Cold War icon, McDonalds is closing in Russia

As it tries to sell its restaurants, McDonalds said it plans to start removing golden arches and other symbols and signs with the company name. He said he would keep his brands in Russia.

Western companies have struggled to extricate themselves from Russia, enduring the hit to their bottom lines by suspending or closing operations in the face of sanctions. Others stayed in Russia at least partially, with some facing a backlash.

French carmaker Renault said on Monday it would sell its majority stake in Russian carmaker Avtovaz and a plant in Moscow to the state, the first major nationalization of a foreign company since the start of the war.

For McDonald’s, its first restaurant in Russia opened in the heart of Moscow more than three decades ago, shortly after the fall of the Berlin Wall. It was a strong symbol of the easing of Cold War tensions between the United States and the Soviet Union, which would collapse in 1991.

Today, the company’s exit is symbolic of a new era, analysts say.

His departure represents a new isolationism in Russia, which must now look inward for investment and consumer brand development,” said Neil Saunders, managing director of GlobalData, a business analytics firm. .

He said McDonalds owns most of its restaurants in Russia, but since it won’t license its brand, the selling price is unlikely to 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 profit before the war, Saunders said.

McDonalds said it expected to take a profit charge of between $1.2 billion and $1.4 billion for leaving Russia.

Its restaurants in Ukraine are closed, but the company said it continues to pay full salaries to its employees there.

McDonalds has over 39,000 locations in over 100 countries. Most are owned by franchisees, only about 5% are company owned and operated.

McDonald’s said leaving Russia would not change its forecast to add 1,300 net restaurants this year, which will contribute about 1.5% to company-wide sales growth.

Last month, McDonald’s announced that it earned $1.1 billion in the first quarter, up from more than $1.5 billion a year earlier. Revenue was nearly $5.7 billion.

Sources

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2/ https://www.pbs.org/newshour/economy/mcdonalds-to-sell-its-850-russian-restaurants

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