McDonald’s Leaves Russia Amid Ukraine War, Seeks Buyer

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McDonald’s is done with Russia After more than three decades of investment, I concluded that doing business there “It is no longer defensible” as the war in Ukraine extends into the third month.

In a letter Monday, Chris Kempczynski, the fast food giant’s CEO, noted in a letter that the fast food giant’s decision to seek a local buyer for hundreds of Russian stores marks the first time it has given up on a major international market. Addressed to “Global McFamily”. But he said it was “impossible to ignore the humanitarian crisis caused by the war in Ukraine”.

The moves underscore the other shoe question for hundreds of multinational companies that have suspended or reduced operations in response to Moscow’s invasion of its neighbor on February 24 – whether to cut ties altogether. Meanwhile, many of the companies that maintained their operations—including many that cited humanitarian causes such as providing food—were swept away. Global backlash as consumers and investors record their shock at wartime devastation and reports of atrocities.

Renault, which was called by Ukrainian President Volodymyr Zelensky, said on Monday it had sold its 68 percent stake in Russia’s largest carmaker, AvtoVAZ, to the government. The selling price was 1 ruble, according to Reuters, albeit with a six-year option to buy back the shares. Last year, the French automaker estimated its Russian assets at $2.3 billion.

Russia may default on its sovereign debt, as sanctions hamper its ability to repay investors

At the same time, the strict regime of international sanctions has made the country an expensive and troublesome place to do business. McDonald’s leadership concluded that continuing to operate in Russia no longer made good commercial sense and would harm its brand. The Golden Arches, one of the world’s most famous emblems, is a $180.8 billion marvel of globalization: it was more than 40000 Stores around the world at the end of 2021 and recorded sales of more than $23.2 billion annually.

join more than 900 companies — including Ikea, Intel, Uber, Adidas and BP — have made “initial exits” from the country, as shown in an extensive follow-up list from Yale University.

The ranks of those “buying time” or “prospecting” have fallen to 371, illustrating how financial and reputational liabilities stack up as the conflict continues, according to Jeff Sonnenfeld, the Yale University professor behind the list.

He described McDonald’s as “late” in rushing out of the country. He also said the company’s departure goes against the long-held “golden rule of diplomacy,” which says no two countries with McDonald’s restaurants will fight each other.

Russia and Ukraine had a wide range of intertwined trade relations when the war began. Now there is pressure to make a choice or risk being seen as rogue state financing. “McDonald’s hasn’t been able to serve Russian customers and buy from Russian suppliers, but they still send money to Putin’s war machine by paying salaries,” Sonnenfeld said in an email to The Washington Post.

The decision to sell its stores in Russia ends with an important chapter for the Chicago-based company, which has opened its doors The first store in Moscow In January 1990 – two months after the fall of the Berlin Wall and less than two years before the collapse of the Soviet Union. Tens of thousands of Russians lined up for the opening, which many remembered as a defining moment in their lives Interviews after decades with The Post.

By the time the Ukrainian War began, McDonald’s had nearly 62,000 employees in 850 communities, according to March 8 statment From the company. Unlike Burger King which The franchise of its restaurants For local operators, McDonald’s operates about 84 percent of its stores there, according to the company’s disclosure. Russia and Ukraine combined accounted for 9 percent of its revenue last year.

It is not yet clear who will get the Russian restaurants – although government officials have suggested that local competitors replace McDonald’s.

The restaurants sold could form the backbone of something new or function effectively as a Russian imitation—although Kempzinski was adamant that the future owner wouldn’t use the McDonald’s name or serve up his menu. The governor of the Moscow region Andrei Vorobyov, in a statement on Telegram published by the state-owned TASS news agency, said that the authorities “will support the McDonald’s chain of restaurants when it passes under the control of Russian partners.”

After the company temporarily closed its Russian stores in March, the local alternative, Uncle Vanya, applied for a trademark for a logo that appeared Strikingly similar to McDonald’s Symbolic golden arches – they seem to lay the groundwork for the acquisition of the current closed McDonald’s restaurants.

Vyacheslav Volodin, head of Russia’s lower house of parliament, said at the time that Russian brands should take over McDonald’s sites. They announced that they would close our doors. Well, well, close. But tomorrow in those locations we should have not McDonald’s, but Uncle Vanya,” he said. “Jobs should be preserved and prices reduced.”

Josh Gerbin, a Washington patent and trademark attorney, says it remains to be seen whether McDonald’s departure will be a voluntary sale rather than a forced nationalization. He says that Uncle Vanya’s trademark was later withdrawn, but that it doesn’t really matter because Russian authorities generally don’t recognize US trademark laws or government sanctions.

“Will Russia allow an orderly transition, not just takeovers of businesses and takeovers of brands?” Gerben said. So far we’ve seen a lot of publicity, a lot of attitudes from the Russian government. Now we’ll see if the bark has any sting.”

Renault is continuing with its plans to leave the country, having already agreed to sell its assets to the government.

Russia is the company’s second largest market, according to Bloomberg News. In March, Renault CEO Luca de Meo warned that leaving the country would create a “very complicated situation” by devouring the company’s profits and sales, Reuters reported.

Now the automaker will sell all of its shares in Renault Russia to the Moscow city government — and its roughly 68 percent stake in the Russian automaker AvtoVAZ, which produces the Lada car, to a Russian federal agency, according to it. press release.

We made a difficult but necessary decision. And we are making a responsible choice towards our 45,000 employees in Russia, while maintaining the performance of the group and our ability to return to the country in the future, in a different context,” new version.

The Russian Ministry of Industry and Trade also announce That the “Russian assets of the Renault Group” would become “state property”.

Russia is considering nationalizing Western companies shut down due to the invasion of Ukraine

The Washington Post reported that Zelensky criticized the company by name in a speech to the French parliament in March.

“Renault, Auchan, Leroy Merlin and others. They should stop sponsoring the Russian military machine, the sponsors of the killing of children and women, the sponsors of rape, robbery and looting by the Russian army,” said Zelensky.

There is an alternative to McDonald’s in Russia – with a strangely familiar logo

There is a possibility that either company will be able to enter Russia at a later time.

Kempzinski ended his letter on Monday by noting that it was “impossible to predict” what the future might hold.

So let’s not end up saying ‘goodbye’. Instead, let’s say as they do in Russian: До новой встречи. ‘Until we meet again.’ “

Colby Itkowitz, Andrew Jeong, and Isabel Khorshodian contributed to this report.

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