Business

De-Arching: McDonald’s sells Russian business and leaves the country | Associated Press

McDonald’s is closing the door in Russia, ending the optimistic era and increasing the isolation of the country. War in Ukraine..

Chicago’s burger giant confirmed Monday that it sells 850 restaurants in Russia. McDonald’s said it would hire 62,000 workers in Russia and look for buyers who would continue to pay them until the deal was closed.

In a letter to employees, McDonald’s president and chief executive officer Chris Kempczin said, “It is certainly right to provide access to food and continue to employ tens of thousands of civilians. Some may argue that this is the case: “But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”

McDonald’s said this was the first time the company had “removed the arch” or withdrew from major markets. We plan to begin removing golden arches and other company name symbols and signs. McDonald’s also said it would hold the trademarks in Russia and take steps to enforce them as needed.

McDonald’s said in early March that it would temporarily close its Russian store but continue to pay its employees. It was a costly decision. At the end of last month, the company announced that it was losing $ 55 million a month due to the closure of its restaurant. We also lost $ 100 million worth of inventory.

McDonald’s has also closed 108 restaurants in Ukraine, where it continues to pay its employees.

Western companies Escape from RussiaWithstand the impact on profits of suspending or terminating operations in the face of sanctions. Others are at least partially staying in Russia, Some facing blowbacks..

French car maker Renault said on Monday Selling a majority stake Russian car company AvtoVAZ and Moscow factory in state — the first major nationalization of foreign companies since the beginning of the war.

Maxim Sytch, a professor of business administration and organization at the Ross School of Business at the University of Michigan, said McDonald and other companies are also facing pressure from customers, employees and investors to do business in Russia. ..

“The days when companies could avoid taking a stance are over,” Sitch said. “People want to have a relationship with a company that is doing the right thing. There is more to business and life than to maximize profit margins.”

McDonald’s Russia’s first restaurant Opened in the middle of Moscow over 30 years ago, Immediately after the fall of the Berlin Wall. It was a powerful symbol of the relief of Cold War tensions between the United States and the Soviet Union, which would collapse in 1991.

Analysts now say the company’s withdrawal is a symbol of a new era. Sitch, who lived in Russia when McDonald’s entered the market and remembers the excitement surrounding the opening, said closing meant a reversal to the Soviet era of isolation.

“It’s really painful to see this vicious war in Ukraine wipe out long-standing profits at the forefront of democracy,” he said.

Kempchinsky left the possibility for McDonald’s to return to the Russian market someday.

“It’s impossible to predict what the future holds, but we’ve decided to end the message in the same spirit that brought McDonald’s to Russia. Hopefully,” he wrote in an employee letter. “Then, don’t end by saying” goodbye “. Instead, say it like Russian. Until we meet again. “

McDonald’s owns 84% ​​of restaurants in Russia. The rest is run by the franchisee. Neil Saunders, managing director of global data, a corporate analytics firm, said that because the brand is not licensed, it is unlikely that the selling price will be close to the value of the pre-intrusion business.

McDonald’s said it expects to record claims for $ 1.2 billion to $ 1.4 billion in revenue as it leaves Russia.

McDonald’s has more than 39,000 locations in more than 100 countries. Mostly owned by franchisees — only about 5% are owned and operated by the company.

McDonald’s said its withdrawal from Russia would not change its forecast to add a net 1,300 stores this year. This will contribute about 1.5% to company-wide sales growth.

Last month McDonald’s reported it Earned $ 1.1 billion in the first quarter, Down from more than $ 1.5 billion in the previous year. Revenue was about $ 5.7 billion.

McDonald’s share price fell $ 1 on Monday to close at $ 244.04.

Copyright 2022 AP communication. all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.



De-Arching: McDonald’s sells Russian business and leaves the country | Associated Press

Source link De-Arching: McDonald’s sells Russian business and leaves the country | Associated Press

Related Articles

Back to top button