After 30+ years, McDonald’s and Russia are over.
Following the invasion of Ukraine, McDonald’s temporarily closed its 800+ Russian stores at a loss of ~$127m, split between Russian employees’ continued salaries and wasted inventory, in Q1.
But now, the fast-food chain has decided that owning stores in Russia is “no longer tenable, nor… consistent with McDonald’s values.”
Russia’s first McDonald’s opened in 1990…
… back when the country was still the Soviet Union. It took 14 years of negotiation, but the 900-seat restaurant — then the largest McDonald’s in the world — was an instant hit.
Long lines formed in Moscow for the “Bolshoi Mak” — the Big Mac — despite the relatively high prices compared to Soviet wages. McDonald’s sold 34k burgers that first day.
What’s next?
McDonald’s plans to sell its Russian stores — ~15% of which are franchises — to a local buyer. As a result, the company expects to write off a $1.2B-$1.4B charge.
As for the stores, they’ll be “de-Arched,” which means removing the McDonald’s name, logo, branding, and menu.
While McDonald’s complete exit is unique…
… other restaurant chains have also halted business in Russia:
- Starbucks and the licensed partner that operates its 130 Russian stores agreed to pause operations
- Yum Brands has suspended operations at its 1k KFC and 50 Pizza Hut franchises
It’s complicated for Mickey D’s rival, Burger King: Parent company Restaurant Brands International wants to close its 800 Russian locations, but can’t due to a legal contract with its main franchisee, who refuses. Instead, it’s trying to offload its 15% stake.
