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McDonald's Will Leave Russia After Over Three Decades Operating There


16/05/2022


McDonald's Will Leave Russia After Over Three Decades Operating There
After more than 30 years in Russia, McDonald's Corp announced on Monday that it will sell all of its restaurants, making it one of the biggest global businesses to leave since the country's invasion of Ukraine.
 
Following the transaction, the business expects to incur a non-cash charge of $1.2 billion to $1.4 billion. Russia and Ukraine accounted for around 9% of its revenue last year, or $2 billion.
 
The world's largest burger chain announced in March that it would close all of its 847 locations in Russia, including the historic Pushkin Square branch in the heart of Moscow.
 
In the waning embers of the Soviet Union, the store, which opened in 1990, was a symbol of blossoming American capitalism. The event drew almost 5,000 visitors.
 
Since closing its outlets in Russia, McDonald's has been losing about $55 million per month to pay employees, landlords, and suppliers for its restaurants in Ukraine and Russia, according to corporate executives.
 
"It is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine the Golden Arches representing the same hope and promise that led us to enter the Russian market 32 years ago," Chief Executive Officer Chris Kempczinski said in a letter to employees.
 
Earlier in the day, Renault said that it will sell its majority ownership in Avtovaz to a Russian science institute, with a six-year option to purchase the stake back.
 
As they scurry to comply with sanctions over the Ukraine crisis and deal with threats from the Kremlin that foreign-owned assets may be taken, a wave of other Western corporations have decided to sell or hand over their Russian assets to local managers.
 
McDonald's announced it plans to sell its Russian locations to a local buyer while keeping the trademark.
 
The company would ensure that its 62,000 employees in Russia are paid until the sale is completed and that they have future employment with any potential buyer.
 
McDonald's restaurants in Ukraine are still shuttered, despite the fact that the company continues to pay its employees full salaries.
 
(Source:www.financialexpress.com)