McDonald's pulls out of Russia entirely

McDonald’s pulls out of Russia entirely

#McDonalds #pulls #Russia

The sign with the golden arches will disappear from Russian urban landscapes. In fact, McDonald’s has announced, on Monday, May 16, its decision to leave Russia. The communication of the American giant materialized in a letter sent by its CEO, Chris Kempczinski, to the “Global McFamily”. The opportunity to remember that the world leader in fast food settled in this country thirty-two years ago. The much-publicized first store opening in Moscow’s Pouchkine Square in January 1990, in what was still the USSR, had attracted a large influx of customers eager to treat themselves to their first “made in the USA” burger. A symbol of the end of the cold war.

Since the outbreak of the invasion of Ukraine by Russian troops on February 24, McDonald’s, like many foreign companies, has been faced with the question of what attitude to adopt. At the end of February, the fast food chain suspended its activities in Ukraine and then, on March 8, it decided to do the same in Russia. He then explained to temporarily close the restaurant doors instead. A position that affected the establishments it owns.

In general, McDonald’s international development strategy is based primarily on a franchise model. However, in Russia, the American company has deployed large-scale own establishments. Of the 850 restaurants that it claims in this country, less than 20% are in the hands of franchisees. The latter, therefore, have sometimes chosen to continue with the activity despite the position adopted by the parent company. Therefore, it was still possible to consume Big Macs in Russia.

In March, “We still had hope that peace would soon return to the region”, emphasizes Mr. Kempzinski, in his letter. Unfortunately, two months later, the American giant takes a new step. His intention now is to completely dismantle the golden arched sign throughout Russia, from St. Petersburg to Moscow, via Nizhny Novgorod and Vladivostok, and to stop all marketing of McDonald’s menus and products. However, he will retain ownership of the brand. The company intends, therefore, to put all its restaurants up for sale and ensure the remuneration of more than 60,000 employees until the operation.

Charge between $1.2 and $1.4 billion

This departure from a major country, described as the first in the company’s history, comes at a cost. McDonald’s estimates that it will have to include in its accounts a charge of between 1,200 and 1,400 million dollars (1,150 to 1,340 million euros). In the financial press release published in April regarding the activity of the first quarter of 2022, the American giant had estimated the cost of salaries and other payments to suppliers after the suspension at 27 million dollars (25.9 million euros). of its activity in Russia and Ukraine during this period. To this was added an amount of 100 million dollars (95.9 million euros) related to losses in the supply chain.

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