McDonald’s sells all of its restaurants in Russia 30 years after the burger chain became a powerful symbol of easing Cold War tensions between the United States and the Soviet Union
McDonald’s is selling all of its restaurants in Russia 30 years after the burger chain became a powerful symbol of easing Cold War tensions between the United States and the Soviet Union.
The company shut down hundreds of sites in March after Russia invaded Ukraine, costing McDonald’s about $55 million a month. On Monday, McDonald’s announced that it would sell those stores and leave Russia.
Alexander Govor, a current McDonald’s licensee, which operates 25 restaurants in Siberia, said McDonald’s will buy 850 Russian restaurants and operate them under a new name, the Chicago burger giant said Thursday.
McDonald’s did not disclose the terms of sale. Last year, McDonald’s Russian operations contributed 9% of the company’s total annual sales, or about $2 billion.
McDonald’s was among the first Western consumer brands to enter Russia in 1990. Its gleaming supermarket near Pushkin Square in Moscow, which opened shortly after the fall of the Berlin Wall, marked a new era of optimism in the aftermath of the Cold War.
It’s the first time the company has “break up” or exited a major market. Plans to begin removing golden arches and other symbols and banners bearing the company’s name. McDonald’s said it would also keep its brands in Russia and take steps to implement them if necessary.
McDonald’s said the sale announced Thursday is subject to regulatory approval, but is expected to close in a few weeks.
Govor, licensed since 2015, agreed to keep the 62 thousand Russian McDonald’s employee for at least two years on equivalent terms. Govor also agreed to pay McDonald’s employees until the sale closed.
Govor is also half-owner of Neftekhimservis, a construction investor who owns an oil refinery in Siberia. He is also a member of the board of directors of Inrusinvest, whose projects include a medical center and the Park Inn hotel in the Siberian city of Novokuznetsk.
It is not clear if other US chains will follow McDonald’s and leave Russia. McDonald’s owned 84% of its Russian stores, giving it greater control over operations than many of its franchisee-owned competitors.
130 Russian Starbucks stores have closed since early March. The Alshaya Group, which has a concession in Kuwait, continues to pay the salaries of its 2,000 Russian employees.
Papa John has suspended corporate operations in Russia and no longer accepts royalty payments from 185 stores there. But stores owned by Colorado-based businessman Christopher Wynn remain open. I left a message Thursday with one of Wynne’s companies.
McDonald’s left open the possibility that he might one day return to Russia.
“It is impossible to predict what the future may hold, but I have chosen to end my letter in the same spirit that brought McDonald’s to Russia in the first place: hope,” CEO Chris Kempczynski wrote in a letter to employees. “So let’s not end up saying ‘goodbye’. Instead, let’s say as they do in Russian: until we meet again.”
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