McDonald’s to sell its Russian business, try to keep workers

McDonald’s saidMonday’s announcement by the company that it had begun the sale of its Russian business. This includes 850 restaurants and 62,000 employees. It is the latest major Western corporation that has left Russia since February when it invaded Ukraine.

The fast-food giant pointed out the humanitarian crisis caused the war. It stated that keeping its business in Russia was no longer sustainable and it wasn’t consistent with McDonald’s values.

In March, the Chicago-based company said it would temporarily close its Russian stores but continue to pay employees. Monday was the official opening of its new Russian store. saidIt would try to find a Russian buyer who could hire the workers and pay them until it closes. It failed to identify a buyer.

Chris Kempczinski is the CEO saidThe “dedication and loyalty of McDonald’s employees” and the hundreds of Russian suppliers made it difficult to make a decision to leave.

Kempczinski: “However we have a responsibility to our global community, and must remain steadfastly in our values.” saidA statement said, “And our commitment to values means that it is impossible for us to keep the arches shining here.”

McDonald’s tries to sell restaurants. saidIt will begin to remove golden arches and other symbols that are associated with the company’s logo. It saidIt will retain its trademarks in Russia.

Three decades ago, Moscow’s first McDonald’s opened. This was just after the fall of Berlin Wall. It was a powerful symbol for the easement of Cold War tensions among the United States of Soviet Union.

McDonald’s was the first American fast-food restaurant to open in the Soviet Union. It would eventually close in 1991. McDonald’s is closing down as American beverage and food giants Pepsi, Coca-Cola, and Starbucks close their operations in Russia due to Western sanctions.

Russian corporations, ranging from British energy giants Shell and BP, to French carmaker Renault, have pulled out of Russia. They are taking a hit on their bottom lines while trying to sell their holdings. Some companies have left, but others have not.

McDonald’s saidIt expects to report a charge on earnings between US$1.2 billion – $1.4 billion for Russia’s exit.

The company has no restaurants in Ukraine, but they do have a website. saidIt will continue to pay its full salary for its employees.

McDonald’s has over 39,000 locations in more than 100 different countries. The majority of the locations are franchisees. Only 5% of them are owned and operated directly by McDonald’s.

McDonald’s saidRussia’s exit will not affect its plan to add net 1,300 restaurants in the next year. This will contribute around 1.5% to companywide growth.

McDonald’s reported last month that it had earned $1.1 billion for the first quarter. This is a decrease from $1.5 billion one year ago. Nearly $5.7 billion was generated.

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