After more than three decades in Russia, McDonald’s — an icon of US lifestyle and capitalism — is selling its Russia business as it looks to leave the country completely.
The move is a significant departure for a brand whose growth across the world became the symbol of globalism and even the basis of a peace theory. As globalist aspirations have fractured in recent years amid the coronavirus pandemic and geopolitical tensions, Russia’s invasion of Ukraine has forced many companies that hoped to operate as normal to take action.
Under growing employee and consumer pressure, many brands and restaurant chains have partly — or fully — paused their operations in Russia. But few have left entirely because of concerns over the welfare of employees and the difficulties of reentering after a departure. McDonald’s said in March that it would temporarily close its operations 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 retrenchment.
“This is a complicated issue that’s without precedent and with profound consequences,” McDonald’s CEO Chris Kempczinski wrote in a memo to franchises, employees, and suppliers that was obtained by The New York Times.
He added: “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. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine the Golden Arches representing 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” those restaurants, meaning they will no longer use the McDonald’s name, logo, or branding. McDonald’s said in a statement that 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.” It will retain its trademarks in Russia.
As 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 said in the statement.
McDonald’s entrée into Russia began at the 1976 Olympics in Montreal, Kempczinski wrote in the memo, 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. “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.”
McDonald’s, which has 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 wrote. “But the end state is clear.”