McDonald’s era in Russia is coming to an end, restaurants are selling out

McDonald’s is selling all of its restaurants in Russia 30 years after the burger chain became a potent symbol of the easing of Cold War tensions between the United States and the Soviet Union

McDonald’s is selling all of its restaurants in Russia 30 years after the burger chain became a potent symbol of the easing of Cold War tensions between the United States and the Soviet Union.

The company closed hundreds of locations in March after Russia invaded Ukraine, costing McDonald’s around $55 million a month. On Monday, McDonald’s announced that it would sell those stores and leave Russia.

An existing McDonald’s licensee, Alexander Govor, who operates 25 restaurants in Siberia, has agreed to buy McDonald’s 850 Russian restaurants and operate them under a new name, the Chicago-based burger giant announced Thursday.

McDonald’s did not disclose the terms of the sale. Last year, McDonald’s Russian operations accounted for 9% of the company’s total annual sales, or about $2 billion.

McDonald’s was among the first Western consumer brands to enter Russia in 1990. Its gleaming department store near Moscow’s Pushkin Square, which opened shortly after the fall of the Berlin Wall, ushered in a new era of optimism in the aftermath of the Cold War.

It is the first time that the company has “disarmed” or left a major market. He plans to start removing the golden arches and other symbols and signs bearing the company name. McDonald’s said it would also keep its trademarks in Russia and take steps to enforce them if necessary.

The sale announced Thursday is subject to regulatory approval but is expected to close within weeks, McDonald’s said.

Govor, laid off since 2015, also agreed to keep McDonald’s 62,000 Russian employees for at least two years on equivalent terms. Govor also agreed to pay the salaries of McDonald’s employees until the sale closes.

Govor is also co-owner of Neftekhimservis, a construction investor that owns an oil refinery in Siberia. He also serves on the board of Inrusinvest, whose projects include a medical center and a Park Inn hotel in the Siberian city of Novokuznetsk.

It is unclear whether other US chains will follow McDonald’s lead and leave Russia. McDonald’s owned 84% of its Russian stores, giving it more control over operations than many of its rivals whose stores are owned by franchisees.

Starbucks’ 130 Russian stores have been closed since early March. Its franchise in the country, the Kuwaiti group Alshaya, continues to pay its 2,000 Russian employees.

Papa John’s has suspended business operations in Russia and is no longer accepting royalty payments from its 185 stores there. But the stores, which are owned by Colorado entrepreneur Christopher Wynne, remain open. A message was left for one of Wynne’s companies on Thursday.

McDonald’s has left open the possibility that he could one day return to Russia.

“It’s impossible to predict what the future holds, but I choose to end my message with the same spirit that brought McDonald’s to Russia: hope,” CEO Chris Kempczinski wrote in a letter to employees. “So let’s not end by saying ‘goodbye’. Instead, let’s say it like they do in Russian: until we meet again. »

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