Topline
Fast food giant McDonald’s on Monday said it is looking to sell its Russian business and leave the market entirely as Moscow’s invasion of Ukraine makes its continued presence untenable, a major symbolic departure for a chain symbolizing American capitalism and the end of more than three decades of business.
McDonald’s supply truck outside factory of 1st McDonald’s restaurant in Moscow, USSR.
Key Facts
McDonald’s has begun the process of leaving the Russian market and selling its business there, the company said on Monday, two months after it temporarily closed more than 800 restaurants in response to Russia’s attack on Ukraine.
The “humanitarian crisis” and “unpredictable operating environment” caused by the invasion of Ukraine means continued business in Russia is “no longer tenable, nor is it consistent with McDonald’s values,” the company said in a statement.
McDonald’s said it plans to sell its entire portfolio to a “local buyer” and will try to ensure its 62,000 employees are paid until the deal closes and have jobs with any future buyer.
As part of the exit, McDonald’s said it will start the “de-Arching” process, company lingo for the removal of the McDonald’s logo, name, branding and menu from restaurants, though it said it will retain its trademarks in Russia.
Chief executive Chris Kempczinski said the decision to leave was “extremely difficult” but necessary as the company’s “steadfast” commitment to its values and the global community “means we can no longer keep the Arches shining” in Russia.
Tangent
McDonald’s said it would temporarily close its 847 Russian restaurants in early March, around two weeks after Russia launched its invasion. It faced heavy criticism and threats of boycotts for continuing to operate in Russia as an increasing number of Western companies pulled out.
Key Background
McDonald’s exit from Russia is significant, marking not only the departure of an industry titan but of a potent emblem of Western money, power and influence spreading across the world. The opening of the very first restaurant in Russia—then part of the Soviet Union—shortly after the fall of the Berlin Wall drew enormous crowds and was heralded as the start of a new, more open era and the lifting of the Iron Curtain. McDonald’s is one of several recognizable international brands questioning their continued operations in Russia after its invasion of Ukraine and one of the first to announce it is selling up and leaving entirely. Russian President Vladimir Putin has vowed to retaliate against companies that suspend operations in or leave Russia over the war, threatening to nationalize their assets. On Monday, French carmaker Renault said it had sold its Russian assets to Moscow, reportedly for a nominal sum of one ruble, becoming the first major company to have its assets effectively transferred to state hands.
Big Number
$1.2-1.4 billion. That’s how much the exit from Russia will cost the fast food giant, McDonald’s said. This is mostly a non-cash write off for its investments.
Further Reading
Renault’s Russian Assets Nationalized After Carmaker Sells To Moscow (Forbes)
McDonald’s Shuts 800 Restaurants In Russia Over Ukraine Invasion (Forbes)
McDonald’s in Russia: departure is about a lot more than burgers (Guardian)
Source: https://www.forbes.com/sites/roberthart/2022/05/16/mcdonalds-says-its-exiting-russia-after-more-than-30-years/