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McDonald’s Selling Restaurants in Russia

Business, Featured

McDonald's restaurant | Image by ATIKAN PORNCHAIPRASIT

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Last week, McDonald’s Corporation announced plans to sell its restaurants in Russia. The move comes two months after the company temporarily closed the establishments.

McDonald’s said in a statement that the March 8 suspension of operations was in response to Russia’s invasion of Ukraine. The eventual sale of the restaurants will end the company’s 30-year operation in Russia.

“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.

McDonald’s currently has 850 stores in Russia and 108 stores in Ukraine, and those stores employed over 62,000 people before closing in March.

The company says its priorities are to ensure all Russian employees continue to be paid while the stores are closed and to find a buyer who will employ all current Russian McDonald’s employees.

The company says it will also continue to pay Ukrainian employees while the restaurants in that country remain closed.

The financial impact of McDonald’s announcement is expected to negatively affect the company’s bottom line in the immediate future. The fast-food giant expects that leaving Russia will result in a charge against earnings between $1.2 billion and $1.4 billion.

According to the AP, Russia and Ukraine constituted 3% of McDonald’s annual operating profits and 9% of sales under the company’s brand before the invasion.

McDonald’s opened its first Russian restaurant in Moscow’s Pushkin Square on January 31, 1990. An estimated 30,000 people got their first taste of the company’s products that day.

Inc Magazine reported that the debut came after nearly 14 years of negotiations and investment by McDonald’s.

The company intends to retain its trademarks and is hoping to begin the dismantling of company signs and symbols, a process they call “de-arching,” within Russia.

According to McDonald’s, if a sale of the restaurants takes place, the buyer will not be able to use the McDonald’s name, branding, logo, or menu.

According to the Epoch Times, four days after the March closures, a trademark for “Uncle Vanya” was filed in Russia and included similar colors and styles to McDonald’s famous logo.

Trademark attorney Josh Gerben said Russia could allow local businesses the power to take over these locations. After Russia legalized patent theft against “unfriendly” nations, compensation for any trademark or patent infringement isn’t expected to be enforced.]

Despite the closures in Russia, McDonald’s is still on track for growth, planning to add approximately 1,300 new stores in 2022. Currently, it has 39,000 locations in more than 100 countries.

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Meade Jenkins
Meade Jenkins
6 months ago

Yo, Mickey D take the write off as a loss doing business with Russia is unethical and just wrong.