McDonald’s Unveils Plans to Sell Its Russian Business amid Growing Sanctions

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by Godfrey Benjamin · 3 min read
McDonald’s Unveils Plans to Sell Its Russian Business amid Growing Sanctions
Photo: Unsplash

McDonald’s Russian business took a good footing in the country around the time when the Soviet Union was falling apart.

American multinational fast food corporation, McDonald’s Corp (NYSE: MCD) has announced it will be selling its Russian business in the wake of growing sanctions on President Vladimir Putin’s government. According to the firm, the current war between Russia and Ukraine and the devastation it has caused does not align with its core values, thus fueling its decision to leave.

“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values,” the company said in a news release.

The decision by McDonald’s to finally sell its Russian business came after an initial suspension of operations in the country when the war broke out more than 2 months ago. The firm noted the decision to find a buyer for the business was not taken lightly considering the fact that it has spent more than 3 decades in the country. During this time, McDonald’s has grown its service outlets to 850 locations housing approximately 62,000 employees.

The firm said it has continued to pay its staff since it first suspended operations in the country, and that it will continue to do so until a buyer and a deal are closed. The fast-food company said it will also help its workers to retain their jobs with the new buyer. While this move shows the company’s deep commitment to its staff and suppliers in the region, CEO,  Chris Kempczinski said the company;

“Have a commitment to our global community and must remain steadfast in our values, and our commitment to our values means that we can no longer keep the arches shining there.”

The company did not announce whether there are bids in line for the new business or the projected timeline within which any such deals will close.

McDonald’s Russian Business: the End of an Era

McDonald’s Russian business took a good footing in the country around the time when the Soviet Union was falling apart. McDonald’s is one of the companies that truly showcased the resilience of American capitalism as it not only infiltrated the new market at the time but was very successful.

The Russian business of the fast-food giant contributes about 2% to the company’s systemwide sales, approximately 9% of its revenue, and 3% of its operating income, Russia occupies a very strategic position in the firm’s business growth.

With its exit, the firm said it is prepared to record a primarily non-cash charge of about $1.2 billion to $1.4 billion. Overall, the Russian invasion of Ukraine has caused the company a number of prominent American businesses that have either suspended their operations or left entirely. Amongst these include PepsiCo Inc (NASDAQ: PEP) and Starbucks Corporation (NASDAQ: SBUX) amongst others.

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