McDonald's Quits Russia for Good After 30 Years

Fast-food giant McDonald’s has announced plans to permanently exit Russia over 30 years after it became one of the first Western brands to open its doors in the country. The fast-food chain, which has started to look for a local buyer to take over the 850 restaurants it owns in the country, said a priority would be ensuring its 62,000 employees in Russia would continue to be paid until any sale was completed. It also hoped staff would be ensured "future employment with any potential buyer." The move comes as Russia’s assault on Ukraine has prompted 7,389 civilian casualties and displaced 6 million refugees, according to the United Nations (UN). As part of McDonald's decision to exit, the company will start the process of removing its iconic branding and “de-arching” retail units. The new owner will not be able to use the existing name, logo or menu. The Chicago-based company said its restaurants in Russia and Ukraine contributed 9% of its annual revenue, around $2 billion. When it first closed doors in Russia back in March, the business estimated the shutdown would cost $50 million per month. As part of the exit, the company expects to write off between $1.2 and $1.4 billion. McDonald’s president and chief executive officer Chris Kempczinski said in a statement: "We have a long history of establishing deep, local roots wherever the arches shine. We're exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business and our local franchisees.” He added: “Their dedication and loyalty to McDonald's make today's announcement extremely difficult. However, we 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." A symbol of the West exits Russia When Russia first waged war on Ukraine in February McDonald’s was one of the first Western advertisers to temporarily shut up shop, with a pledge to continue paying staff. A brand exodus followed, as consumers piled pressure on corporations to reassess their links with Russia following economic sanctions imposed by the U.S., EU and U.K. L’Oreal, Kraft Heinz, Ikea and Starbucks were among some of the global companies to halt operations in Russia and offer humanitarian aid to Ukrainians. Other Western businesses operating in Russia as franchises, such as Burger King, Marks & Spencer and Papa John’s, are still operational under local management. This means despite cutting ties at a corporate level, their doors are still open across hundreds of high streets and shopping malls—and there’s not much brand owners can do about it. As a marker of American capitalism, McDonald’s decision to retreat from Russia carries its own symbolism. When it first opened in Moscow’s Pushkin Square in 1990, the brand’s golden arches stood as a powerful emblem representing the easing of Cold War tensions between the West and the Soviet Union. That day, a reported 30,000 Russians queued for hours to get a taste of a Big Mac. When the brand launched, TV ads on a state-backed commercial channel ran with the tagline: “If you can’t go to America, come to McDonald’s in Moscow.” Last month, a study of 2,000 U.K. adults from ad trade body Institute of Practitioners in Advertising (IPA) found 88% of people were in favor of brands addressing the ongoing war. 60% said the most appropriate brand response was to stop doing business with Russia while 57% believe Western businesses should pause dealings with their Russian counterparts. Earlier this week, Renault announced it is selling its majority stake in Russian carmaker Avtovaz following pressure over its continued presence in the country. People Want Brands to Take Action on Russia-Ukraine War, but Not Through Ads