McDonald’s Corporation has stated it will quit the Russian market after more than 30 years of operations and has begun the process of selling its Russian business. This comes after McDonald’s announced on March 8, 2022, that it was temporarily closing restaurants and pausing operations in Russia.
The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values.
As part of McDonald’s decision to exit, the Company is pursuing the sale of its entire portfolio of McDonald’s restaurants in Russia to a local buyer.
The Company intends to initiate the process of “de-Arching” those restaurants, which entails no longer using the McDonald’s name, logo, branding, and menu, though the Company will continue to retain its trademarks in Russia. McDonald’s priorities include seeking to ensure the employees of McDonald’s Russia continue to be paid until the close of any transaction and that employees have future employment with any potential buyer.
“We have a commitment to our global community and must remain steadfast in our values,” said McDonald’s CEO Chris Kempczinski in a statement, adding the chain’s presence was “no longer tenable” in Russia. “Our commitment to our values means that we can no longer keep the arches shining there.”
McDonald’s outlets in Ukraine are still shuttered, but the company is still paying full salaries to its Ukrainian employees and supporting local relief efforts coordinated by Ronald McDonald House Charities. McDonald’s is assisting Ukrainian refugees in Europe with food donations, housing, and work.
The Company intends to record a charge of about $1.2-1.4 billion to write off its net investment in the market and recognize large foreign currency translation losses previously recorded in shareholders’ equity as a result of its exit from Russia.
The burger giant is Russia’s oldest American fast-food franchise. Following the fall of the Berlin Wall, it opened its first restaurant in central Moscow in January 1990, to tens of thousands of people in line.
Sources: Breitbart, Japantimes, Reuters