This past Monday, an announcement came from McDonald’s that it now plans to sell off all of its locations in Russia after operating successfully in the country for well over 23 years.
The titanic fast-food franchise stated via a news release that Russia’s invasion of Ukraine, along with many other unpredictabilities, are the reasons for its choice to leave the country.
“We’re exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald’s make today’s announcement extremely difficult,” stated McDonald’s president and chief executive officer, Chris Kempczinski, in a recent press release.
“However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there,” he went on.
All McDonald’s locations throughout Ukraine have already been closed down while the company continues to pay the full salaries of the employees being impacted, according to statements from the company. The corporation has also maintained its support for Russia’s Ronald McDonald House Charities.
“Across Europe, the McDonald’s System is supporting Ukrainian refugees through food donations, housing and employment,” continued the release.
The closures will take down 847 total locations throughout Russia.
“The departure of McDonald’s from Russia is particularly notable given its arrival was emblematic of a rush among Western companies in the 1990s to enter the country, seeking to profit from its move from communism to capitalism. McDonald’s opened its first Russian location in Moscow’s Pushkin Square in 1990, when thousands of locals lined up to get their first taste of the American chain’s burgers and fries,” read a report from the Wall Street Journal.
The projected financial losses from this choice will be massive, according to the managing director of GlobalData Neil Saunders.
“The fact that McDonald’s owns most of its restaurants in Russia means there is an asset rich business to sell,” claimed Saunders in a release this past Monday. “However, given the circumstances 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 the sale price will be anywhere near the pre-invasion book value of the business.”
The Journal also reported that the state-run TASS news agency from Russia has also announced on Monday that the former McDonald’s locations will reopen under a different name after about a month of downtime.
McDonald’s also unveiled that it would be writing off well over $1.4 billion as part of its overall withdrawal, highlighting good growth across the rest of its locations, which are about 95% locally owned and operated.