McDonald’s plans to sell all of its business in Russia and “de-arch” its restaurants as a result of the war in Ukraine, chief executive Chris Kempczinski wrote to company staff in a memo Sunday.
McDonald’s plans to leave the country completely after 32 years in Russia. The move comes on the heels of many American companies taking action against Russia’s invasion of Ukraine. But McDonald’s removing its arches is one of the most striking, given that its been a symbol for worldly peace and globalism.
McDonald’s will become one of the first restaurant companies to remove its business in its entirety after having closed its stores in early March but still paid employees – a trend that other American companies such as Starbucks and Pizza Hut also executed. Up until now, many companies had resisted a full shutdown because of employee welfare, but the overarching issue of the war held too much weight.
“This is a complicated issue that’s without precedent and with profound consequences,” Kempczinski wrote in a message to franchises, employees and suppliers. “Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is surely the right thing to do.
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“But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine the Golden Arches representing the same hope and promise that led us to enter the Russian market 32 years ago,” he said.
The McDonald’s name, logo and branding are no longer allowed to be used, while the trademarks are still retained in Russia. The restaurants currently in Russia will “de arch” and the company will sell the establishments to a local buyer, with hopes of establishing employment for the current McDonald’s staff members. McDonald’s staff will be paid until the close of a transaction.
The decision will be costly for McDonald’s, but the fast food juggernaut will record a write-off around $1.3 billion, citing “foreign currency translation losses,” according to a company statement.
“This was not an easy decision, nor will it be simple to execute given the size of our business and the current challenges of operating in Russia,” Kempczinski wrote. “But the end state is clear.”
The history of McDonald’s in Russia began in the 1976 Olympics in Montreal when the Russian Olympic team used the company’s Big Mac Bus. In 1990, Russia opened its first McDonald’s in Moscow.