McDonald's closing all Russia locations

The fast-food giant has been silent on its response to the Ukraine invasion—until now.

cDonald's is temporarily closing its restaurants in Russia, a response to that country's war in Ukraine. The Chicago-based company is pausing all operations at its 847 locations in Russia, CEO Chris Kempczinski said in a companywide email today. Read the email below.

EARLIER Chicago companies brace for repercussions from Ukraine invasion

McDonald’s, which employs 62,000 people in Russia, works with hundreds of local Russian suppliers, Kempczinski said. All 108 locations in Ukraine have also been closed. It plans to continue paying its Russian and Ukrainian workers. “The conflict in Ukraine and the humanitarian crisis in Europe has caused unspeakable suffering to innocent people. As a system, we join the world in condemning aggression and violence and praying for peace,” Kempczinski said. “Our number one priority from the start of this crisis has been—and will remain—our people.” Unlike other Chicago companies operating in the region, McDonald’s has been publicly silent since Russia invaded Ukraine almost two weeks ago. Pressure was mounting—from customers, investors and employees—for the company to act. Of McDonald’s nearly 850 stores in Russia, 84% are company operated. All of its Ukraine locations are company operated. Business in the two countries amounted to about 2% of systemwide sales last year and generated 9% of total corporate revenue. Kempczinski said it is “impossible” to know when restaurants in Russia might reopen. The company is also experiencing supply chain disruptions and other operational impacts. Closing all of its stores in Russia is not a move some experts expected. Losing that chunk of revenue is a blow, and recovering Russian consumers’ trust when the war is over could come at a major cost. Russia had been helping fuel growth for McDonald's, according to recent company filings. The move was less surprising after the Biden administration’s announcement this morning that the U.S. would stop buying Russian oil, said Ron Culp, a former corporate public relations executive who teaches at DePaul University. “That was basically a signal that the U.S. was saying stop doing business there,” he said. And by this point, almost two weeks after the invasion, many expected McDonald’s to do something more dramatic than offer humanitarian aid. The company has become somewhat of a proxy for the West, he said. “It just screams United States of America, even though it is a very global brand,” Culp said. In his email, Kempczinski stopped short of criticizing Russia or its president, Vladimir Putin. He did mention the pressure McDonald’s was facing as a global company with operations in both countries, and around the world. “In recent days, I have spoken with and heard from many in our system about our operations in Russia,” he said. “The situation is extraordinarily challenging for a global brand like ours, and there are many considerations. For 66 years, we have operated with the belief that communities are made better when there’s a McDonald’s nearby.” The softer language is a departure from other companies that have halted business in Russia, which have fully condemned the invasion of Ukraine. Visa and Mastercard said Saturday that they were suspending operations in Russia. Visa’s statement cited “Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” while Mastercard referred to the “unprecedented nature of the current conflict and the uncertain economic environment.” Mastercard on Friday condemned Russia’s “unjustified, unprovoked and unlawful invasion” of Ukraine and suspend sales of products and services in Russia. McDonald’s is likely trying to make its Russian reopening, whenever that may be, easier. "You don't want to close the door on Russia," Culp said. "(Kempczinski) wants to go back. If you take him head on, Putin is not going to be forgiving." When McDonald’s opened its first restaurant in what was then the Soviet Union in January 1990, tens of thousands of people lined up that first day, waiting in line for hours. The Golden Arches have become a beacon of the West in Russia, and some expected McDonald’s to suffer anti-American sentiment as the war in Ukraine progressed. Other big brands that had been under pressure to halt Russia operations made similar announcements today as well, according to the New York Times. Starbucks said the 130 restaurants it has in Russia would close, Coca-Cola said it would suspend Russian operations, and PepsiCo said it would suspend soda sales, but continue manufacturing some products such as milk and baby formula. Though McDonald’s did not speak publicly on the war until today, Kempczinski said in his message that the company provided immediate financial support to Ukraine. The company is continuing to pay full salaries for its Ukrainian employees. It has donated $5 million to its Employee Assistance Fund and supported the International Red Cross. Employees in neighboring countries are helping those fleeing Ukraine, he noted. “As many of our colleagues in Ukraine have sought refuge, they have found the familiar support of the McDonald’s system in new and unfamiliar places,” he said. “In Poland and many other markets across Europe, our system has literally opened their homes, their hearts and their restaurants.”


chicagobusiness.com

Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square