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McDonald's will leave Russia and take a loss of up to 1.4 billion dollars

2022-05-16T12:14:38.497Z

The company is already looking for a local buyer for its chain of restaurants in the country The successful opening of the first Russian McDonald's in Moscow's Pushkin Square in late January 1990 was symbolic of perestroika. The USSR still existed, but the Berlin Wall had already fallen a few months before. Muscovites flocked to try the new restaurant, an icon of capitalism. It was the end of an era. Now, more than 32 years later, the American company has announced that it is leaving the



The successful opening of the first Russian McDonald's in Moscow's Pushkin Square in late January 1990 was symbolic of perestroika.

The USSR still existed, but the Berlin Wall had already fallen a few months before.

Muscovites flocked to try the new restaurant, an icon of capitalism.

It was the end of an era.

Now, more than 32 years later, the American company has announced that it is leaving the country.

An era also ends.

McDonald's, which had already closed its restaurants temporarily in March, has assured this Monday that it stops operating in the country and puts its business up for sale.

The decision will cost him a fee of $1.2 billion to $1.4 billion, the company said in a statement.

For the most part, it will not have a cash effect, but will mean deregistration of assets in the country.

In addition, it will recognize exchange differences that it had been charging in its equity accounts.

The suspension of its activity first and this definitive departure is now due to the instability created in the country by the invasion of Ukraine, which made it difficult for the firm to operate.

"The humanitarian crisis caused by the war in Ukraine, and the unpredictable operating environment that precipitates it, have led McDonald's to conclude that business continuity in Russia is no longer sustainable, nor is it consistent with McDonald's values," he said.

Chris Kempczinski, CEO of the company, added: “We are 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.

Your 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."

restaurants for sale

Right now, the company is trying to sell its entire restaurant portfolio to some local buyer.

In addition, they will not be able to maintain their name, brand, logo or menu.

The company will keep its trademarks in Russia, but the new buyer will not be able to use them.

"McDonald's priorities include trying to ensure that McDonald's Russia employees continue to be paid until the close of any transaction and that employees have future employment with any potential buyers," the statement said.

McDonald's has been out of business in Russia since March 8.

Then he lowered the blind of his 850 restaurants, two weeks after the start of the war.

The company had about 62,000 people, whom it has continued to pay ever since.

A payment that will be maintained, according to the firm, until it finds a buyer for its commercial network.

The opening of the first McDonald's in Russia, on January 31, 1990 in Pushkin Square in Morcu.

VITALY ARMAND (AFP)

Then, Kempczinski already anticipated in a letter addressed to the staff that the company would analyze the evolution of the situation to determine if there were more decisions in this regard: "At this time, it is impossible to predict when we will be able to reopen our restaurants in Russia."

After almost three months of war, the departure of McDonald's from the country does not seem to be a temporary suspension and becomes definitive.

Now, with the definitive exit announcement, the company has slightly adjusted its economic forecasts for the year.

He expects his operating margin to be around 40%, somewhat lower than before the closing announcement.

Excluding the closure of the Russian outlets, the group expects to open 1,300 restaurants during the year and to contribute 1.5% growth to sales in local currency.

McDonald's investments in the year as a whole will be between 2,100 and 2,300 million dollars.

The group has 39,000 restaurants in more than 100 countries around the world.

95% of them are managed by local operators, mainly franchisees.

The firm is not the only American multinational that suspended its activity in Russia due to the economic uncertainty that hangs over the country.

All kept their thousands of short-term jobs, although they waited for the situation to clear up.

Announcing a definitive closure implied closing the doors to return to the market if the situation normalizes.

But the problems worsen and extend over time.

Dozens or hundreds of companies continue with hibernated activity in Russia, including many Spanish ones such as Inditex, Mango, Tendam, Tous or Porcelanosa.

With the announcement of McDonald's, the ban is also opened for the definitive departure of a list of large Western companies from Russia.

Source: elparis

All business articles on 2022-05-16

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