I am not loving it: McDonald's finally leaves the Russian market
More than three decades after McDonald's became the first American fast food restaurant to open in the Soviet Union, McDonald's said on May 16 that it had begun the process of selling its business in Russia, another symbol of the country's growing isolation due to the war in Ukraine, reports AP.
The company, which has 850 restaurants in Russia and employs 62 people, pointed to the humanitarian crisis caused by the war, saying that keeping the business in Russia "is no longer appropriate and not in line with McDonald's values."
In early March, the Chicago fast food giant said it was temporarily closing its restaurants in Russia but would continue to pay its employees. Without naming a potential buyer from Russia, McDonald's said on May 16 that it would be looking for one in order to hire its workers and pay them until the auction closes.
CEO Chris Kempchinski said the "commitment and loyalty to McDonald's" from employees and hundreds of Russian suppliers made the decision to leave difficult.
“However, we have obligations to our global community and must remain true to our values,” Kempczynski said in a statement, “and our commitment to our values means we can no longer keep our arches shining there.”
In an attempt to sell its restaurants, McDonald's said it plans to begin removing the golden arches and other company name symbols and signage. The company said it would retain its trademarks in Russia.
Some companies have stayed in Russia, at least in part, and most have faced backlash.
French automaker Renault said on May 16 that it would sell a controlling stake in the Russian automaker AvtoVAZ and a factory in Moscow to the state, the first major nationalization of foreign business since the start of the war.
The first McDonald's restaurant in Russia opened in the center of Moscow over thirty years ago, shortly after the fall of the Berlin Wall. It was a powerful symbol of the easing of Cold War tensions between the United States and the Soviet Union, which collapsed in 1991.
According to analysts, the departure of the company is a symbol of a new era.
“Her departure represents a new isolationism in Russia, which must now seek domestic investment and consumer brand development,” said Neil Saunders, managing director of GlobalData, a corporate analytics company.
He said McDonald's owns most of its restaurants in Russia, but because it won't license its brand, the sale price probably won't be close to the pre-invasion value of the business. Russia and Ukraine combined accounted for about 9% of McDonald's revenue and 3% of operating income before the war, Saunders said.
Its restaurants in Ukraine are closed, but the company said it continues to pay full wages to its employees.
McDonald's has over 39 locations in over 000 countries. Most of them are owned by franchisees - only about 100% are owned and operated by the company.
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McDonald's said the exit from Russia would not change its forecast for a 1300-store expansion this year, which would account for about 1,5% growth in company-wide sales.
McDonald's reported last month that it made $1,1 billion in its first quarter, up from more than $1,5 billion a year earlier. Revenue was almost $5,7 billion.
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