McDonald’s Withdraws from Russia after 32 Years of Operation
McDonald’s has decided to pull out of Russia entirely, three months after the country invaded Ukraine.
The company, in a statement, said that operating in Russia is “no longer tenable,” due to the “humanitarian crisis” and “unpredictable operating environment” in the country, whose economy has been devastated by Western sanctions. It has announced plans to sell all 850 restaurants across the country to a local buyer, who will not be permitted to use the McDonald’s logo. The company, however, has committed to ensuring its Russian employees – numbering over 62,000 at present – have “future employment with any potential buyer.”
Russia’s decision to invade Ukraine and its political environment, which has become increasingly nationalistic during the war, also influenced the company’s decision. “Our commitment to our values means that we can no longer keep the Arches shining there,” said Chris Kempczinski, McDonald’s President and CEO. The company had previously closed its Russian operations temporarily in March, shortly after the war began, but only announced a decision to withdraw from the country on Monday. It had faced considerable criticism on social media for not leaving the country entirely.
McDonald’s joins a long line of Western companies that have either paused, divested, withdrawn, or otherwise severed ties with the Russian economy, which is now the most sanctioned in the world. They include some of the world’s most recognizable corporate brands, such as Apple, Adidas, Coca-Cola, Disney, ExxonMobil, Goldman Sachs, MasterCard, McKinsey, Nike, Netflix, and Starbucks.
A few companies, such as PepsiCo, have stopped selling their main products but continue to sell essential items such as baby formula for “humanitarian” reasons to the Russian population, facing crippling shortages. Some companies, such as Burger King and Marks and Spencer, have cited complex business deals as the reason for not closing operations.
McDonald’s decision to exit is being seen as symbolizing the end of Russia’s economic openness to the world.
The company has long been an international symbol of Western capitalism and American soft power, with 38,000 locations across 100 countries worldwide. Its entry into the Soviet Union in 1990 – under the “perestroika” policy of liberalization pursued by then-leader Mikhail Gorbachev – was seen as a watershed moment in modern history, reflecting the triumph of free market capitalism over communism at the end of the Cold War. It also prompted a number of academic theories about economics and politics, including the “Big Mac” thesis about peace between nations and, famously, Francis Fukuyama’s “End of History” theory.
McDonald’s closure in Russia will reduce its revenue by 9 percent and, per the company, lead to a write-off of $1.4 billion. That figure also includes Ukrainian restaurants, all 108 of which have been closed since war began. However, McDonald’s has said that it continues to pay Ukrainian employees their full salaries during the conflict.
