McDonald’s to Shut its Business in Russia

McDonald’s, the icon of the U.S lifestyle, has announced its Russian business for sale after more than three decades. The move comes after it works to leave the country in an absolute sense.

The move is a significant departure for a brand whose expansion globally became the representative of globalism and even the root of peace theory. However, as global aspirations faced breakdown due to the pandemic and geopolitical tension, Russia’s invasion of Ukraine has resulted in several companies that had aimed to operate as normal taking action. 

In March, McDonald’s, which employs 62,000 people in Russia, said that it would temporarily shut its operation there, as other chains like Starbucks and Yum Brands, the parent company of KFC and Pizza Hut. Various employees and activists have pushed for a complete retrenchment.

“This is a complicated issue without precedent and with profound consequences,” Chris Kempczinski, the chief executive of McDonald’s, wrote in a message to franchisees, employees, and suppliers obtained by The New York Times.

McDonald’s plans to sell its business, which offers 850 restaurants, some run by Franchises, to a local buyer. It is likely to “de-arch” those restaurants, which means they would 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.”

McDonald’s will record a write-off of US$1.2 billion to US$ 1.4 billion and identify “foreign currency translation losses,” said the company. 

McDonald’s was established in Russia during the 1976 Olympics in Montreal. In his memo, he wrote Mr. Kempczinski to franchisees, suppliers, and employees when the chain allowed the Russian Olympic players to use its Big Mac Bus. In 1990, McDonald’s opened in Moscow. 

McDonald’s has about 39,000 restaurants in more than 100 countries and has invested billions of dollars across its supply chain and restaurants in Russia.