After more than 30 years of operations in the country, McDonald’s Corporation announced it will exit the Russian market permanently and has initiated a process to sell all of its restaurants, which totals about 850 locations across the country. This follows McDonald’s announcement on March 8, that it had temporarily closed restaurants in Russia and paused operations in the market.
According to McDonald’s website statement, the humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have propelled the company to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values.
As part of McDonald’s decision to exit, the Company is pursuing the sale of its entire portfolio of McDonald’s restaurants in Russia to a local buyer. The Company intends to initiate the process of “de-Arching” those restaurants, which entails no longer using the McDonald’s name, logo, branding, and menu, though the Company will continue to retain its trademarks in Russia. McDonald’s priorities include seeking to ensure the employees of McDonald’s Russia continue to be paid until the close of any transaction and that employees have future employment with any potential buyer.
McDonald’s President and Chief Executive Officer, Chris Kempczinski, said, “We have a long history of establishing deep, local roots wherever the Arches shine. We’re exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald’s make today’s announcement extremely difficult. However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there.”
While known for its franchise model, McDonald’s owns more than 80% of its 847 Russian restaurants, and sales in that country make up about 9% of total revenues. Kempczinski said the Ronald McDonald House Charities will continue to run there, and in Ukraine, the CEO said McDonald’s continues to pay full salaries for its Ukrainian employees, has donated $5 million to its Employee Assistance Fund, and continues to support relief efforts led by the International Red Cross in the region.
According to Fast Company, as one of the world’s most famous brands, McDonald’s had been called out for being late in its reaction to the Russian invasion, with #BoycottMcDonalds becoming a trending Twitter topic. While major brands like Visa, MasterCard, Nike, Netflix, Alphabet, Apple, Levi’s, and many others had earlier suspended sales and/or operations, the Golden Arches stood out. But now that McDonald’s has exited the country permanently, their statement and stance has gotten much larger.
The significance of McDonald’s closing its operations holds more weight, given its historical role in opening Russia up to Western culture after the Cold War. Three months after the fall of the Berlin Wall, the company opened its first location in Moscow. But that was then, and this, is now.
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