After more than three decades in Russia, McDonald’s – an icon of American lifestyle and capitalism – is selling its Russia business as it appears to be leaving the country completely.
The move is a significant departure for a brand whose growth worldwide became the symbol of globalism and even the basis of a peace theory. As globalist ambitions have been shattered in recent years amid the coronavirus pandemic and geopolitical tensions, Russia’s invasion of Ukraine has forced many companies hoping to operate normally to take action.
Under increasing employee and consumer pressure, many brands and restaurant chains have partially – or completely – stopped their operations in Russia. But few have quit solely because of concerns about employee welfare and the difficulty of getting back in after a departure. McDonald’s said in March that they would temporarily close the business there, as did several other chains, including Starbucks and Yum Brands, the parent company of KFC and Pizza Hut. Many employees and activists have pushed for a full reduction.
“This is a complex case that is unprecedented and has profound consequences,” wrote Chris Kempczinski, CEO of McDonald’s, in a message to franchisees, employees and suppliers obtained by The New York Times.
He added: “Some may argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is certainly the right thing to do. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine that the golden arches represent the same hope and promise that led us to enter the Russian market 32 years ago. “
McDonald’s plans to sell its business to a local buyer. It will “de-arch” these restaurants, meaning they will no longer use McDonald’s name, logo or branding. McDonald’s said in a statement that its “priorities include seeking to ensure that employees at McDonald’s in Russia continue to be paid until the end of each transaction and that employees have future employment with any potential buyer.” It will retain its trademarks in Russia.
As a result of the move, McDonald’s will record $ 1.2 billion in depreciation to $ 1.4 billion and recognize “losses in foreign currency translation,” the company said in the statement.
McDonald’s main course in Russia began at the 1976 Olympics in Montreal, Mr. Kempczinski wrote in his note to franchisees, employees and suppliers, as the chain allowed the Russian Olympic team to use the Big Mac Bus. Fourteen years later, in January 1990, McDonald’s opened in Moscow.
“In the history of McDonald’s, it was one of our proudest and most exciting milestones,” wrote Mr. Kempczinski. “After almost half a century of enmity in the Cold War, the image of the golden arches shining over Pushkin Square heralded for many, on both sides of the Iron Curtain, the beginning of a new era.”
McDonald’s, which has 39,000 restaurants in over 100 countries, has since invested billions of dollars across the supply chain and restaurants in Russia.
“This was not an easy decision, nor will it be easy to implement given the size of our business and the current challenges of operating in Russia,” Mr. Kempczinski wrote. “But the final state is clear.”