McDonald’s said Tuesday it is temporarily closing all of its 850 restaurants in Russia in response to the country’s invasion of Ukraine, a highly symbolic move for the U.S. chain that was among the first to enter the former Soviet Union three decades ago.
The burger giant said it will continue paying its 62,000 employees in Russia “who have poured their heart and soul into our McDonald’s brand.” But in an open letter to employees, McDonald’s President and CEO Chris Kempckinski said closing those stores for now is the right thing to do.
“Our values mean we cannot ignore the needless human suffering unfolding in Ukraine,” Kempczinski said.
Kempczinski said it’s impossible to know when the company will be able to reopen its stores.
“The situation is extraordinarily challenging for a global brand like ours, and there are many considerations,” Kempczinski wrote in the letter. McDonald’s works with hundreds of Russian suppliers, for example, and serves millions of customers each day.
McDonald’s has also temporarily closed 108 restaurants in Ukraine and continues to pay those employees.
McDonald’s could take a big financial hit because of the closures. In a recent regulatory filing, the Chicago-based company said its restaurants in Russia and Ukraine contribute 9% of its annual revenue, or around $2 billion last year.
Unlike other big fast food brands in Russia that are owned by franchisees __ including KFC, Pizza Hut, Starbucks and Burger King __ McDonald’s owns 84% of its Russian locations.
Yum Brands, the parent company of KFC and Pizza Hut, said Monday that it is donating all of the profits from its 1,050 restaurants in Russia to humanitarian efforts. It has also suspended new restaurant development in the country. Burger King said it is redirecting the profits from its 800 Russian stores to relief efforts and donating $2 million in food vouchers to Ukrainian refugees. Starbucks is also donating profits from its 130 Russian stores to humanitarian efforts.
McDonald’s said Tuesday it has donated more than $5 million to its employee assistance fund and to relief efforts. It has also parked a Ronald McDonald House Charities mobile medical care unit at the Polish border with Ukraine; another mobile care unit is en route to the border in Latvia, the company said.
When McDonald’s opened its first store in Moscow, in Jan. 31, 1990, it was hailed as a sign of the thawing Cold War. Thousands of Russians lined up before dawn to try hamburgers __ many for the first time. By the end of the day, 30,000 meals had been rung up on 27 cash registers, an opening-day record for the company.
Many corporations have ceased operations in Russia in protest of the Ukraine invasion. Among them is consumer goods conglomerate Unilever, which on Tuesday said it has suspended all imports and exports of its products into and out of Russia, and that it will not invest any further capital into the country.
Pressure has been mounting on those that remain and hashtags to boycott companies like McDonald’s, Coca-Cola and PepsiCo quickly emerged on social media.
Last week, New York State Comptroller Thomas DiNapoli __ a trustee of the state’s pension fund, which is a McDonald’s investor __ sent a letter to McDonald’s and nine other companies urging them to consider pausing their operations in Russia.
In a statement Tuesday, DiNapoli commended McDonald’s for its action.
“As one of the largest domestic corporations doing business in Russia, McDonald’s suspension of operations there should send a strong message to other companies,” DiNapoli said. “Russia’s attack on Ukraine, its violent imperialism, threatens the global economy and makes doing business there extraordinarily risky if not untenable.”
In his letter, Kempczinski cited influential former McDonald’s Chairman and CEO Fred Turner, whose mantra was, “Do the right thing.”
“There are countless examples over the years of McDonald’s Corp. living up to Fred’s simple ideal. Today is one of those days,” Kempczinski said.
Photo by Dmitry Spravko on Unsplash
