US fast-food giant McDonald’s said it will leave Russia after the invasion of Ukraine, ending a streak of more than three decades that began in the hopeful period near the end of the Cold War.
The restaurant chain, which launched in Moscow in January 1990 to great fanfare almost two years before the Soviet Union dissolved, characterized the pullout as difficult but necessary.
“The humanitarian crisis caused by the war in Ukraine and the precipitous unpredictable operating environment have led McDonald’s to conclude that continued ownership of the business in Russia is no longer sustainable, nor is it consistent with McDonald’s values,” the company said in a statement. release. statement.
The chain is seeking to sell “its entire portfolio of McDonald’s restaurants in Russia to a local buyer.”
The burger giant is one of a number of foreign companies that pulled out of the country or suspended operations following Moscow’s invasion of Ukraine in late February.
Earlier today, French automaker Renault announced it had handed over its Russian assets to the government, marking the first major nationalization since the start of Western sanctions against Moscow’s military campaign.
Russian President Vladimir Putin ordered troops into pro-Western Ukraine on February 24, triggering unprecedented sanctions and prompting an exodus of foreign corporations, including H&M, Starbucks and Ikea.
In March, citing the “unspeakable suffering of innocent people,” McDonald’s closed all of its 850 restaurants in the country, where it says it employs 62,000 workers.
But on Monday, the Big Mac maker went a step further, saying the company “is looking to sell its entire portfolio of McDonald’s restaurants in Russia to a local buyer.”
After the sale, restaurants will no longer be able to use the McDonald’s name, logo, brand or menu, although the company will retain its trademark in the country, the company said.
Russia currently accounts for nine percent of the company’s revenue and three percent of its operating profit.
McDonald’s expects a one-time charge of $1.2 billion to $1.4 billion to pay off the investment.
A new age’
The withdrawal offers a stark contrast to the optimism that surrounded the arrival of the quintessential American brand in Russia in the last days of the Cold War.
The company began discussing the Russian business at the 1976 Olympics in Canada, where McDonald’s allowed Russian athletes to use the Big Mac Bus as a sign of goodwill.
That led to 14 years of negotiations, “culminating on that glorious day in January 1990 when the first McDonald’s opened with such hope and excitement in Pushkin Square,” McDonald’s CEO Chris Kempczinski recalled in a message to employees. .
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“In McDonald’s history, it was one of the most exciting and proud milestones,” Kempczinski said. “After almost half a century of animosity during the Cold War, the sight of the Golden Arches shining over Pushkin Square heralded for many on both sides of the Iron Curtain the dawn of a new era.”
In the decades that followed, McDonald’s operations in Russia expanded far beyond Moscow as the company invested billions of dollars and expanded its supply chain.
But Kempczinski said the investment in Russia was no longer viable in business terms or consistent with the company’s values.
Still, he closed his message on a note of hope, saying, “Let’s not end up saying, ‘goodbye’… (but) ‘Until we meet again.'”
The company’s decision to divest “underlines the view that relations with Russia will not be normalized anytime soon,” said Neil Saunders, a retail expert at GlobalData.
The terms of the exit, including the financial challenges facing potential Russian buyers, mean that “the sale price is unlikely to come close to the pre-invasion book value of the company,” Saunders said, adding that the exit “will leave a hole”. in McDonald’s growth plans “which is not easy to meet in the short term”.
McDonald’s shares fell 0.4% to $243.24 by mid-morning.
© AFP 2022