After more than three decades, McDonald’s (NYSE: MCD) decided to pull the plug on its Russian operations, and sell all of its restaurants to a local buyer.
After pausing all Russian operations back in March in response to Moscow’s military operation in Ukraine, McDonald’s re-evaluated its business strategy, deciding to leave the country entirely. The world’s biggest burger chain announced that it will sell its Russian business— comprised of 850 restaurants— to a local buyer after 32 years of operations, and will “de-arch” the locations, stripping them of its name, logo, and branding.
According to an internal memo seen by the New York Times, McDonald’s will continue to pay its Russian employees until the transaction is complete, and they have found ulterior places of employment.
As a result of the sale, the fast food giant is expected to a take on a write-off of anywhere between $1.2 billion and $1.4 billion, and acknowledge “foreign currency transaction losses,” McDonald’s said in a statement. Since pausing operations, it has cost the company about $55 million per month to keep its staff, landlords, and suppliers on the payroll in Russia and Ukraine.
“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. 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,” said the company’s CEO Chris Kempczinski as cited by the New York Times.
Information for this briefing was found via McDonald’s and the NYT. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.