The McDonald’s hamburger chain temporarily closes its 850 stores in Russia | Economy

A family walks into a McDonald's in Moscow in April 2018.
A family walks into a McDonald’s in Moscow in April 2018.Tatyana Makeyeva (Reuters)

If the first sign of a thaw between East and West was the opening of a McDonald’s store in Budapest in distant August 1989, the temporary closure of the 850 stores that the American chain operates in Russia, announced this Tuesday, may be the cultural and commercial symbol of the world slamming the Russia of Vladimir Putin. The company has yielded to the pressure of public opinion and, after its persistent silence on the events, decided to temporarily suspend its operations in the country “because we cannot ignore the unnecessary suffering caused to Ukraine” by the Russian invasion.

The company will continue to pay wages to its 62,000 employees, as well as to suppliers. The closure notice has been sent to all the premises and their workers. For the company, explains the message, “the number one priority since the beginning of the war has been and is the people. As a company, we join the world in condemning aggression and violence, and praying for peace.”

The key may lie in the fact that McDonald’s owns most of the stores that operate under its brand in Russia (those in Ukraine have closed due to the invasion, but its workers continue to collect their payroll). Of all the American fast food chains with a presence in Russia, it was the most exposed, according to a report released Monday by Bank of America Securities, according to which the rest of the fast food chains fast food it has “limited exposure” in risk and image because most, if not all, of its stores are franchised. These restaurants generate less revenue, but are also more protected in the event of a sudden economic downturn or recession, even if their chain is based in the US. By contrast, McDonald’s exposure is immense: although since Russia’s invasion and annexation of Crimea in 2014 it has downsized its holdings, owning around 84% of the restaurants in Russia. Those it had on the annexed Ukrainian peninsula closed down a few days after the occupation.

“In 2014, after Russia received the first sanctions for its invasion of Crimea, there was a national backlash against American businesses, including McDonald’s, whose restaurants in Moscow closed for health violations”, although it reopened them shortly after, Bank of America Securities explained this Monday in the note to clients, collected by the Canadian television network CNBC.

Since opening its first location in the Soviet Union 32 years ago, McDonald’s has grown its presence in Russia and Ukraine to more than 900 locations. Those restaurants represent 2% of global sales, about 9% of its revenue and 3% of its operating income. In the statement, the Chicago-based multinational boasts of “having fed millions of Russians daily.”

Along with Coca Cola, another symbol of the commercial and iconographic power of the United States, Macdonalds had become a target of public opinion these days for its delay in ruling on the conflict, unlike other important computer, financial and textile companies. . This weekend Visa, Mastercard and American Express announced the temporary suspension of all their activities in Russia. Also fashion giants such as Inditex, owner of Zara, with 502 stores in Russia, Puma or the luxury firm Prada.

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