The burgers chain will sell its business in Russia, saying that “the humanitarian crisis caused by the war in Ukraine and the accelerating unpredictable operating environment have led McDonald’s to conclude that continuing ownership of business in Russia is no longer reliable. consistent with McDonald’s values. ”
In March, shortly after the start of the war, McDonald’s followed other Western companies and temporarily closed its restaurants in Russia. Once the sale is finalized, Russian restaurants will be “de-arched,” meaning that venues will no longer be allowed to use McDonald’s name, logo or menu. McDonald’s (MCD) said its employees would still be paid until the deal was completed and that “employees have a future job with any potential buyer.”
Chief Executive Officer Chris Kempczynski said he was proud of the more than 60,000 workers employed in Russia, and said the decision was “extremely difficult”.
“However, we have a commitment to our global community and we must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there,” he said.
The end of an era
The decision marks a remarkable end to McDonald’s 30-year relationship with Russia. McDonald’s opened its first restaurant in Moscow on January 31, 1990. More than 30,000 were served, and Pushkin Square was to remain open hours later due to crowds.
His arrival in Moscow was more than a Big Mac and french fries, said Dara Goldstein, an expert on Russia at Williams College. This was the clearest example of the attempt of the President of the Soviet Union Mikhail Gorbechev to open his disintegrating country to the outside world.
“There was a really visible crack in the Iron Curtain,” she said earlier. “It was very symbolic of the changes that were happening. About two years later, the Soviet Union would disintegrate.
The release of McDonald’s “represents a new isolationism in Russia that must now look inward for investment and consumer brand development,” said Neil Saunders, managing director of GlobalData, in a note Monday. He added that other Western brands are taking a “principled stand on the concepts of freedom and democracy” and are reviewing their business in Russia.
Great price to leave
McDonald’s will take a significant write-off from leaving Russia – between $ 1.2 billion and $ 1.4 billion. The shares were hardly changed in pre-market trading.
“The fact that McDonald’s owns most of its restaurants in Russia means it has a rich sales business,” Saunders said. “However, given the circumstances of the sale, the financial challenges facing potential Russian buyers and the fact that McDonald’s will not license its brand or identity, it is unlikely that the selling price will be close to the book value before the business invasion. . “
In its latest earnings report, McDonald’s said closing its restaurants in Russia had cost it $ 127 million in the last quarter. Nearly $ 27 million comes from staff costs, lease payments and supplies. The other $ 100 million was from food and other items he would have to throw away.
McDonald’s had 847 restaurants in Russia late last year, according to an investment document. Together with another 108 in Ukraine, they represent 9% of the company’s revenues in 2021.
– Daniel Wiener-Bronner of CNN Business contributed to this report.
Add Comment