After 32 years of successful operations, McDonald’s quits Russia amid the recent ongoing geopolitical turmoil. PepsiCo, Coca-Cola and Starbucks also took similar decisions.
Burger restaurant chain McDonald’s Corporation (NYSE: MCD) is the latest among the list of companies exiting their operations from Russia. On Tuesday, March 8, McDonald’s announced a temporary closure at all of their 850 locations across Russia.
The restaurant chain cites “the needless human suffering unfolding in Ukraine,” for its reason to exist. Interestingly, the decision came two weeks after Russia announced its invasion of Ukraine. McDonald’s received major criticism for staying silent on the matter.
Russia alone contributes to 2% of the global and 9% of the global revenue for the burger chain. McDonald’s had first started its operations 32 years back in Moscow, just a few months before the collapse of the USSR.
In his letter to all McDonald’s Russian franchisees and employees, CEO Chris Kempczinski said that they will stop all operations in Russia. The company, however, decides to pay all of its 62,000 Russian employees. Further, it will continue to operate Ronald McDonald House Charities. CEO Chris Kempczinski said:
“In the thirty-plus years that McDonald’s has operated in Russia, we’ve become an essential part of the 850 communities in which we operate. At the same time, our values mean we cannot ignore the needless human suffering unfolding in Ukraine.”
Will McDonald’s Ever Come Back to Russia?
The relations between the US and Russia have touched the lowest point following the latest geopolitical turmoil. It will be tough for McDonald’s to make an exit forever as the company owns 84% of all Russian locations. The rest are owned by franchises.
Besides, McDonald’s has always expanded its footprint like a real estate company. This generates greater revenue for the company. However, times of geopolitical distress like the current one put them in a state of turmoil.
McDonald’s CEO said that it is very difficult to predict whether they would reopen their stores in the future. The company said that it is already experiencing supply-chain disruptions and other operational challenges.
“It’s impossible to predict when we might be able to reopen our restaurants in Russia. We are experiencing disruptions to our supply chain along with other operational impacts. We will also closely monitor the humanitarian situation,” he added.
Following McDonald’s, other companies like PepsiCo, Coca-Cola and Starbucks announced similar measures to exit Russia.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
