McDonald’s and Coca-Cola suspends business in Russia
McDonald’s said it is temporarily closing all of its 850 restaurants in Russia in response to the country's invasion of Ukraine. The Coca-Cola Company also announced Tuesday that it has suspended business in Russia amid its war on Ukraine.
'The right thing to do': McDonald's closes all restaurants in Russia
McDonald’s said it is temporarily closing all of its 850 restaurants in Russia in response to the country's invasion of Ukraine.
The burger giant said on Tuesday it will continue paying its 62,000 employees in Russia “who have poured their heart and soul into our McDonald’s brand".
But in an open letter to employees, McDonald’s President and CEO Chris Kempckinski said closing those stores for now is the right thing to do.
“Our values mean we cannot ignore the needless human suffering unfolding in Ukraine,” Kempczinski said.
McDonald's was the first big Western fast-food chain to open a restaurant in the Soviet Union, after a summit between Soviet leader Mikhail Gorbachev and US President Ronald Reagan led to the USSR permitting joint ventures in 1987.
The burger chain opened its first restaurant in the Soviet capital in January 1990 — a joint venture between McDonald's Canada and Moscow City Council — beating its competitor Pizza Hut by several months.
The restaurant — the largest McDonald's in the world at the time — has not shut its doors since, bar a sanitary inspection closure in 2014.
The closure for "health and safety violations" was seen as an act of retaliation over US sanctions against the Kremlin for its annexation of the Ukrainian peninsula of Crimea and involvement in the war in the eastern region of Donbas. The restaurant, however, reopened after 90 days.
Now, Kempczinski said it is impossible to know when the company will be able to reopen its stores.
“The situation is extraordinarily challenging for a global brand like ours, and there are many considerations,” Kempczinski wrote in the letter.
Big fast food brands donate proceedings, suspend operations
McDonald's works with hundreds of Russian suppliers, for example, and serves millions of customers each day.
The company has also temporarily closed 108 restaurants in Ukraine and continues to pay those employees.
McDonald's could take a big financial hit because of the closures. In a recent regulatory filing, the Chicago-based company said its restaurants in Russia and Ukraine contributed 9% of its annual revenue, or around €1,83 billion ($2 billion).
Unlike other big fast-food brands in Russia that are owned by franchisees — such as KFC, Pizza Hut, Starbucks and Burger King — McDonald’s owns 84% of its Russian locations.
Yum Brands, the parent company of KFC and Pizza Hut, said on Monday that it is donating all of the profits from its 1,050 restaurants in Russia to humanitarian efforts. It has also suspended new restaurant development in the country.
Starbucks has said it is also donating profits from its 130 Russian stores to humanitarian efforts.
Consumer goods conglomerate Unilever said on Tuesday it has suspended all imports and exports of its products into and out of Russia, and that it will not invest any further capital into the country.
McDonald's said on Tuesday it has donated more than €4,58m ($5m) to its employee assistance fund and to relief efforts.
It has also parked a Ronald McDonald House Charities mobile medical care unit at the Polish border with Ukraine.
No more CocaCola in Russia
"Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine," it said in a statement.
"We will continue to monitor and assess the situation as circumstances evolve.”
Earlier, US-based multinational coffeehouse chain Starbucks Corporation announced it has suspended all business activity in Russia, including all product shipments.
The number of Western companies pulling out of Russia is increasing as the war in Ukraine continues.