Golden Arches get dark in Russia as McDonald’s exits after 30 years

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May 16 (Reuters) – McDonald’s Corporation (MCD.N) On Monday, it became one of the biggest global names to come out of Russia, as it made plans to sell all of its restaurants after operating for more than 30 years in the country after its invasion of Ukraine.

The world’s largest burger chain, which owns about 84% of nearly 850 restaurants in Russia, will charge non-cash related fees of up to $1.4 billion.

McDonald’s decided in March to close its restaurants in the country, including the site of the famous Pushkin Square in the center of Moscow – a symbol of the flourishing of American capitalism in the moribund coals of the Soviet Union.

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In Russia in the early 1990s, the burger chain became a means of tasting Western food and soul for millions of people, although the cost of one burger was many times greater than the daily budgets of city dwellers.

“Some would argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is certainly the right thing to do,” CEO Chris Kempczynski said in a letter to employees. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”

Although the vast majority of stores in Russia are closed, a few franchise stores have remained open, taking advantage of its growing popularity. It generated about 9%, or $2 billion, of its revenue from Russia and Ukraine last year.

The McDonald’s restaurant logo appears in the window with a reflection of the Kremlin Tower in central Moscow, Russia, March 9, 2022. REUTERS/Maxim Shemetov

Footage on social media over the weekend showed long, winding queues appearing at the restaurant at Moscow’s Leningradsky station, one of the only branches in the capital that remained open.

McDonald’s said it was looking to sell its restaurants in Russia to a local buyer, but would keep its brands.

“Given the conditions of the sale, the financial challenges faced by potential Russian buyers, and the fact that McDonald’s will not license its brand name or identity, it is unlikely that the sale price will be close to the company’s pre-invasion book value,” said Neil Saunders, Managing Director of GlobalData.

McDonald’s said it will ensure that its 62,000 employees in Russia continue to be paid until any transaction is closed and that they have future jobs with any potential buyer.

After McDonald’s decided to close stores in March, several American brands appeared, including Starbucks (SBUX.O)PepsiCo (PEP.O) The Coca-Cola Company (KO.N) She followed suit, racing to comply with the sanctions and deal with the Kremlin’s threats of possible confiscation of foreign-owned assets. Read more

“I wouldn’t be surprised to see other companies follow McDonald’s lead in exiting the market,” said Edward Jones analyst Brian Yarbrough.

Earlier today, French automaker Renault (RENA.PA) She said she would sell her largest stake in Avtovaz (AVAZI_p.MM) Russian Institute of Science. Read more

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Additional reporting by Uday Sampath and Deborah Sophia in Bengaluru. Editing by Sriraj Kalovila and Arun Koyor

Our criteria: Thomson Reuters Trust Principles.

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