McDonald's pulls out of Russia

·2-min read
A woman is in front of a McDonald's restaurant near the Red Square in Moscow. Photo by Vlad Karkov/SOPA Images/LightRocket via Getty Images)
A woman is in front of a McDonald's restaurant near the Red Square in Moscow. Photo by Vlad Karkov/SOPA Images/LightRocket via Getty Images)

FAST-food chain McDonald’s has announced that it is to leave Russia for good. After temporarily closing its 847 outlets in the country in March following Vladimir Putin’s decision to invade Ukraine, it is now pulling out altogether.

Has this been on the cards for a while?

The invasion of Ukraine earlier this year caused global corporations such as Starbucks, Coca Cola and McDonalds huge ethical problems. When McDonald’s was deemed to be moving too slowly to close its outlets in Russia there was even a call to boycott the fast-food chain in the west. Since sanctions were placed on Russia by western governments, the pressure on companies still trading there has grown.

What’s the thinking behind the move?

McDonald’s has suggested that it has taken action due to the "unpredictable operating environment" in Russia and in response to the ongoing invasion.

“It is impossible to ignore the humanitarian crisis caused by the war in Ukraine,” McDonald’s chief executive Chris Kempczinski admitted in a message to employees.

And, he added, “it is impossible to imagine the Golden Arches representing the same hope and promise that led us to enter the Russian market 32 years ago.”

Ah yes, McDonald’s in Moscow was a symbol for the end of the Cold War.

That’s right. When the first branch opened in on January 31, 1990, in Pushkin Square, Moscow, the Soviet Union was still in existence. Photographs of the McDonald’s signage show the addition of the Soviet flag with its hammer and sickle symbol.

But the demand for this taste of the west – some 30,000 customers were served on that first day – was evidence of how the country was changing during Glasnost.

The Congress of People's Deputies voted for the dissolution of the Soviet Union in September 1991.

Will this hurt McDonald’s financially?

Undoubtedly. The fast-food chain reported in April that, as a result of the temporary closures of its Russian and Ukrainian stores the previous month, it had lost $127m (almost £102m) in lost sales. And it is preparing to write off $1.4bn (£1.1bn) as a result of this decision.

But McDonald’s has said that its Russian business “is no longer tenable, nor is it consistent with McDonald's values."

It will now begin a process of “de-arching” its Russian restaurants.

The question now is will other Western businesses – including KFC and Pizza Hut – opt to do the same?

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