McDonald’s to leave Russia permanently after 32 years

After over 30 years of operation, fast food retail giant, McDonald’s is set to permanently leave Russia.

WithinNigeria recalls that in March McDonald’s temporarily shut down its roughly 850 restaurants in the country as part of the economic fallout following Russia’s invasion of Ukraine.

The Chicago-based company, owns 84% of its stores in Russia, and has said that its restaurants there and in Ukraine contributed 9% of its annual revenue, or around $2bn (£1.6bn).

As part of the exit, the company expects to record a non-cash charge of between $1.2bn (£980m) and $1.4bn.

“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,” McDonald’s said on Monday, May 16.

According to the company it has started to sell its restaurants there and made the decision because of the “humanitarian crisis” and “unpredictable operating environment” caused by the Ukraine war.

McDonald’s plans to sell its business, which employs 62,000 people and includes 850 restaurants (including those run by franchisees), 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.

The company said owning business in Russia was “no longer tenable” or consistent with its values.

“This is a complicated issue that’s without precedent and with profound consequences,” Chris Kempczinski, the chief executive of McDonald’s, wrote in a message 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.”