McDonald’s has announced it will sell everything it owns in Russia rather than waiting to see what happens with the war in Ukraine and whether Vladimir Putin remains leader of the country. That’s a major loss, but McD’s says being there at all is just not its way…
A McDonald’s location in Moscow. Shuttered first, now to be ‘de-Arched’…
As you’ll no doubt recall, back in mid-March, McDonald’s and 4 other major fast food chains closed their stores across Russia in protest against President Vlad Putin’s ‘special military operation’ against Ukraine. Now McDonald’s, at least, is divesting itself of all its holdings in Russia and won’t be going back again any time soon – if ever.
Not compatible with McValues
“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,” yesterday’s corporate news release reads. “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.”
Like de-commissioning a ship
The exit from Russia will involve what McDonald’s calls ‘de-Arching’. That means, they’ll be taking down the Golden Arches and McSignage from the properties and stripping out everything related to, “the McDonald’s name, logo, branding, and menu.” But the company will retain its trademarks in Russia, to ensure that no future owner can use them improperly.
A big financial McHit
The fast food giant will sell the majority of its 850 stores in Russia (a few are owned by franchisees) taking an estimated loss of something like (US)$1.4 billion. If you weren’t aware before, McDonald’s corporate is actually a real-estate holding company. It makes the lion’s share of its profits from owning about 95 percent of its 39,000 store locations in more than 100 countries around the world and leasing them back to franchisees.
More than 62,000 McDonald’s employees have been out of work since the initial closure two months ago – but the company has spent millions making sure they continue to be paid. That’s extremely generous. The news release says, “McDonald’s priorities include seeking to ensure the employees of McDonald’s Russia continue to be paid until the close of any [sale] transaction and that employees have future employment with any potential buyer.”
Commitment to Ukraine remains strong
The chain’s restaurants across the Ukraine remain closed, but there are no plans to sell them: “The Company continues to pay full salaries for its employees in the country and continues to support local relief efforts led by Ronald McDonald House Charities. Across Europe, the McDonald’s System is supporting Ukrainian refugees through food donations, housing and employment.”
So far, McD’s stands alone
None of the other western resto chains that also closed their doors in Russia ‘temporarily’ back in March has announced they’re pulling out completely, like McD’s. Not yet, anyway. As has always been the case, though, McDonald’s is setting a high bar for corporate citizenship in its sector and we’ll be interested to see if other majors such as Starbucks and Burger King follow suit.
~ Maggie J.