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After more than 30 years in Russia, McDonald’s leaves the country permanently

The American fast-food giant McDonald’s, which closed its stores in Russia in early March, announced this Monday that he will withdraw from the country and will sell all its operations, in reaction to the invasion in Ukraine.

“We’re committed to our global community and we must remain uncompromising in our values,” Group CEO Chris Kempczinski was quoted as saying in a company statement.

“Respecting our values ​​means that we cannot continue to maintain” McDonald’s in Russia, he added.

An image of McDonald’s in Russia in 1990, a few days after opening. Photo: AP

Present in Russia for more than 30 years, McDonald’s had 850 restaurants and 62,000 employees.

The company announced the temporary closure of all its establishments and the suspension of its operations in the country on March 8, following in the footsteps of other multinationals that distanced themselves from Moscow.

Russia, where McDonald’s directly manages more than 80% of its restaurants bearing its name, represents 9% of the company’s total turnover and 3% of its operating profit.

A symbol of capitalism and a new era

Russia’s first McDonald’s opened its doors in the heart of Moscow more than three decades ago, shortly after the fall of the Berlin Wall. It was a powerful symbol of the easing of Cold War tensions between the United States and the Soviet Union.

Russian President Boris Yeltsin greets chain employees in 1990. Photo: REUTERS

Russian President Boris Yeltsin greets chain employees in 1990. Photo: REUTERS

McDonald’s was the first american fast food restaurant to open in the Soviet Union, which collapsed in 1991.

McDonald’s decision to leave the country comes at the same time that other American food and beverage giants, such as Coca-Cola, Pepsi and Starbucks, have discontinued or closed its operations in Russia because of Western sanctions.

McDonald’s said it expects to record a charge against earnings of between $1.2 billion and $1.4 billion for leaving Russia. Its restaurants in Ukraine are closed, but the company said it continues to pay the full salaries of its employees there.

McDonald’s has more than 39,000 locations in more than 100 countries. Most are owned by franchises, and only 5% are owned by the company.

McDonald’s said the exit from Russia will not change its forecast to add 1,300 net restaurants this year, which will contribute 1.5% to company-wide sales growth.

A queue in front of a McDonald's store in Russia in 1992. The chain was a success since its arrival in the country, which it is now leaving after more than 30 years.  Photo: EFE

A queue in front of a McDonald’s store in Russia in 1992. The chain was a success since its arrival in the country, which it is now leaving after more than 30 years. Photo: EFE

Last month, McDonald’s reported that it had earned $1.1 billion in the first quarter, compared to more than 1,500 million the previous year. Revenue was nearly $5.7 billion.

A wave of departures that does not stop

Everything from British energy giants Shell and BP to French carmaker Renault have pulled out of Russia, dealing a heavy blow to their bottom lines as they seek to sell their holdings in the country. Other companies have stayed, at least partially, and some face setback.

Renault said in a statement that it had ceded its majority stake (67.69%) in AvtoVAZ, the largest Lada carmaker in Russia, to NAMI, the Russian Institute for Research and Development of Automobiles and Motors.

Thanks to AvtoVAZ, Russia was the second largest market for the Renault Group last year, behind Europe, with nearly half a million vehicles sold.

Financial details were not disclosed, but Russian Industry and Trade Minister Denis Manturov said in April that Renault planned to sell its Russian assets for “a symbolic ruble”.

“Agreements have been signed on the transfer of the Russian assets of the Renault Group to the Russian Federation and the government in Moscow,” the ministry said in a statement.

The French car group also ceded Renault’s operations in Russia, including the plant near the capital that produced Renault and Nissan vehicles, to the city of Moscow.

Mayor Sergei Sobyanin announced that the factory is going to relaunch the Soviet brand Moskvich.

Renault’s management had already announced that it was going to include in its accounts for the first half a charge of 2.2 billion euros (about 2.3 billion dollars) as a result of this sale.

Source: AFP and AP

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