McDonald’s closes hundreds of restaurants in Russia after online criticism

In an open letter, McDonald’s CEO Chris Kempczinski wrote that the conflict in Ukraine has caused “unspeakable suffering to innocent people,” and that the company condemns the “aggression and violence.”

“McDonald’s has decided to temporarily close all our restaurants in Russia and pause all operations in the market,” Kempczinski wrote. “We understand the impact this will have on our Russian colleagues and partners, which is why we are prepared to support all three legs of the stool in Ukraine and Russia. This includes salary continuation for all McDonald’s employees in Russia.”

Other major Western brands like Netflix, LVMH, Google, Levi’s, [hotlink]Nike,[/hotlink] and Shell have previously all exited the Russian market. 

The move from McDonald’s follows warnings from investors that the company’s continued presence in Russia put it in a precarious position. The chief of New York State’s pension fund, which is invested in McDonald’s, previously told Reuters that McDonald’s, PepsiCo, and others with a large footprint in Russia “need to consider whether doing business in Russia is worth the risk during this extraordinarily volatile time.”  

The hashtag #BoycottMcDonalds has also been trending across Twitter. 

McDonald’s did not respond to Coins2Day’s request for comment. 

McDonald’s position in Russia

Not every McDonald’s in Russia is owned by the company itself. Many are franchises owned by local people, and operate independently from the umbrella brand.

But McDonald’s owns around 84% of its 847 restaurants in Russia, according to a page on its website for investors. Russia accounts for 9% of its total revenues and less than 3% of its operating income globally.

According to an investor note from Bank of America Securities, the McDonald’s brand was under a lot of pressure to continue operating as a result of this outsize exposure to Russia. The bank notes other restaurant groups have less exposure in the country, as they don’t directly own franchised restaurants and can shift responsibility to local ownership.

Before McDonald’s made the announcement that it would be closing its locations, Yale University professor Jeffrey Sonnenfeld, who is compiling a list of companies quitting Russia, told the Washington Post on Tuesday that the company was a “screaming anomaly that’s bewildering to all its peers,” because it does directly own so many of its restaurants.

Yum Brands, which owns Taco Bell, KFC, Pizza Hut, and others has more than 1,000 restaurants in Russia, which account for around 2% of its systemwide sales. But the majority of those locations are franchised, according to BofA Securities analyst Sara Senatore. On Tuesday, Yum Brands also announced that it was pausing investment and development in Russia.

This article has been updated to reflect that McDonald’s is temporarily closing its locations in Russia.