Home News McDonald’s is retiring from Russia after 30 years

McDonald’s is retiring from Russia after 30 years

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McDonald’s Corp. has become one of the largest companies to withdraw from Russia, exposing plans to sell all its restaurants after operating in the country for more than 30 years, notes Reuters.

The world’s largest burger restaurant chain, which owns about 84 percent of Russia’s nearly 850 restaurants, will bear a non-cash tax of up to $ 1.4 billion.

McDonald’s had decided in March to close its restaurants in the country, including the iconic location on Pushkin Square in central Moscow – a symbol of American capitalism flourishing in the dying fire of the Soviet Union.

In Russia in the early 1990s, the burger chain became a way for millions of people to taste Western food and spirit, even though the cost of a burger was several times the daily budget of many townspeople.

“Some may argue that food security and the continued employment of tens of thousands of citizens is certainly what needs to be done,” CEO Chris Kempczinski said in a letter to employees. “But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”

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Although the vast majority of stores in Russia are closed, a few franchised stores remained open, taking advantage of the growing popularity. Last year, it generated about 9%, or $ 2 billion, of its revenues in Russia and Ukraine.

Over the weekend, long queues were seen at the restaurant in Leningradsky railway station in Moscow, one of the only branches in the capital that remained open, as shown by images on social networks.

McDonald’s has said it wants to sell its Russian restaurants to a local buyer, but will keep its trademarks.

“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, the sale price is unlikely to come close to the pre-invasion business value.” said Neil Saunders, CEO of GlobalData.

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McDonald’s said it would ensure that Russia’s 62,000 employees would continue to be paid until all transactions were completed and that they would have future jobs with any potential buyer.

Following McDonald’s decision to close stores in March, several US brands, including Starbucks Corp, PepsiCo Inc and Coca-Cola, followed suit, working to comply with sanctions and to face threats from the Kremlin, which said foreign assets could be confiscated.

“I wouldn’t be surprised to see other companies following McDonald’s example of going out of business,” said Edward Jones analyst Brian Yarbrough.

Earlier in the day, French carmaker Renault said it would sell its majority stake in Avtovaz to a Russian scientific institute.

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