McD’s to sell its Russia business
McDonald’s is closing its doors in Russia, ending an era of optimism and increasing the country’s isolation over its war in Ukraine.
The Chicago burger giant confirmed Monday that it is selling its 850 restaurants in Russia. McDonald’s said it will seek a buyer who will employ its 62,000 workers in Russia, and will continue to pay those workers until the deal closes.
“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,” McDonald’s President and CEO Chris Kempczinski said in a letter to employees. “But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”
McDonald’s said it’s the first time the company has ever “de-arched,” or exited a major market. It plans to start removing golden arches and other symbols and signs with the company’s name. McDonald’s said it will also will keep its trademarks in Russia and take steps to enforce them if necessary.
Late last month, the company said it was losing $55 million each month due to the Russia restaurant closures. It also lost $100 million worth of inventory. McDonald’s has also closed 108 restaurants in Ukraine and continues to pay employees there.
Maxim Sytch, a professor at the University of Michigan’s Ross School of Business, said McDonald’s and others also face pressure from customers, employees and investors over their Russian operations.
“The era where companies could avoid taking a stance is over,” Sytch said. “People want to be associated with companies that do the right thing.”
McDonald’s first restaurant in Russia opened in the middle of Moscow more than three decades ago, shortly after the fall of the Berlin Wall.
McDonald’s has more than 39,000 locations across more than 100 countries.