It appears the greatest institution of American capitalism, McDonadld’s, has failed in communist Russia with news overnight the burger chain will be closing all its restaurants in Russia in protest at the ongoing war in Ukraine.
McDonald’s was one of the first western brands to open in post-cold war Russia and, in the 1990s, it was seen as a symbol that Russia was finally opening-up to the rest of the world.
However, a decree has now come down from Chicago head office that has said it will now begin “de-Arching” all its restaurants in Russia in a move expected to cost the fast food giant $US1.4 billion ($A2 billion).
In a statement overnight, McDonald’s said: “After more than 30 years of operations in the country, McDonald’s Corporation announced it will exit the Russian market and has initiated a process to sell its Russian business.
“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values,” the statement read.
It said it was looking to sell “its entire portfolio of McDonald’s restaurants in Russia to a local buyer”.
It added: “The Company intends to initiate the process of ‘de-Arching’ those restaurants, which entails no longer using the McDonald’s name, logo, branding, and menu, though the Company will continue to retain its trademarks in Russia.”
McDonald’s’ Russian operations account for nine per cent of the company’s global revenues and three per cent of overall profit.
The move will make Russia the largest country in the world without a single McDonald’s restaurant, and the most populous after Nigeria and Bangladesh.
It also makes McDonald’s one of the few major global brands to permanently pull out of the country in protest at the war.
Starbucks, KFC and Pizza Hut have all currently suspended their Russian operations.
McDonald’s is guaranteeing its 62,000 Russian workers employment with the stores’ new owners as part of any sale deal, and pledged to continue paying them until then.
McDonald’s CEO Chris Kempczinski said in a statement: “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. 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.”
Kempczinski described the opening of the first Russian McDonald’s as: “In the history of McDonald’s, it was one of our proudest and most exciting milestones.
“After nearly half a century of Cold War animosity, the image of the Golden Arches shining above Pushkin Square heralded for many, on both sides of the Iron Curtain, the beginning of a new era,” Kempczinski said.
Yet it appears the company hasn’t ruled out a possible return in the future.
“Let us not end by saying, ‘goodbye.’ Instead, let us say as they do in Russian: ‘Until we meet again’,” Kempczinski said.
