McDonald’s Sells Business In Russia Amid Global Worries

By Stefan J. Bos, Chief International Correspondent Worthy News

MOSCOW (Worthy News) – McDonald’s, the U.S. fast-food franchise which came to symbolize American capitalism and even a peace theory, is selling its business in Russia.

Mc Donald’s looks to leave the country entirely as pressure mounts on Russia over its invasion of Ukraine.

It is a significant change for the brand, underscoring geopolitical tensions and disappointing companies that hoped to re-emerge after the COVID-19 pandemic.

McDonald’s, which employs 62,000 people in Russia, said recently it would temporarily close its operations there, like other chains such as Starbucks and Yum Brands, the parent company of KFC and Pizza Hut.

“Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is surely the right thing to do,” admitted Chris Kempczinski, the chief executive of McDonald’s, in a statement.

“But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine,” Kempczinski added.

BUSINESS SELLING

McDonald’s plans to sell its business, including 850 restaurants, some run by franchisees, to a local buyer.

It will “de-arch” those restaurants, meaning they will no longer use the McDonald’s name, logo, or branding.

McDonald’s said its “priorities include seeking to ensure the employees of McDonald’s in Russia continue to be paid. Until the close of any transaction and that employees have future employment with any potential buyer.”

The withdrawal of McDonald’s from Russia ended an era that began in the 1976 Olympics in Montreal, Canada, when the chain allowed the Russian Olympic team to use its 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,” Kempczinski wrote.

Its arrival in Moscow was about more than just Big Macs and fries. “After nearly half a century of Cold War animosity, the image of the Golden Arches shining above Pushkin Square heralded for many, on both sides of the Iron Curtain, the beginning of a new era,” Kempczinski said.

NOT EASY

McDonald’s, with 39,000 restaurants in over 100 countries, has since invested billions of dollars across its supply chain and restaurants in Russia.

“This was not an easy decision, nor will it be simple to execute given the size of our business and the current challenges of operating in Russia,” Kempczinski stressed. “But the end state is clear.”

As a result of the move, McDonald’s will record a write-off of $1.2 billion to $1.4 billion and recognize “foreign currency translation losses,” the company admitted.

McDonald’s had 847 restaurants in Russia at the close of last year, according to data.

Together with another 108 in Ukraine, they accounted for 9 percent of the company’s revenue in 2021.

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