McDonald's confirmed its decision to cease operations in Russia amid its invasion of Ukraine last week, closing nearly 850 of its restaurants.
The American franchise is one of many, including Starbucks and Coca-Cola, who have announced plans to cease operations in the country. The decision serves as the only one of its kind since its initial launch in the country.
"Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine," the company said, BBC News reported.
Amati Global Investors’ Fund Manager Anna MacDonald said that the rise of closures is mainly a result of "shareholders and wider stakeholders [that] wouldn't stand for continued generation of revenues and profits" from the country.
"It was affecting their share prices and the feeling was that it was just utterly inappropriate to continue to do so," she said, according to BBC News.
The restaurant’s signature burgers and fries quickly attracted Russian customers upon expanding to Moscow in 1990, forming a significant part of the Soviet Union’s historic efforts to establish its own economy, BBC News reported.
McDonald's also temporarily closed 108 restaurants in Ukraine as the conflict between the country and Russia continues. The company’s Chief Executive Chris Kempczinski said the company has no way of knowing when the stores will reopen. Collectively, both countries make up approximately 9% of the firm’s revenue and 2% of global sales, BBC News reports.
On the contrary, the fast-food chain’s competitor, Burger King, has chosen to keep its Russian stores open to continue abiding to "long-standing legal agreements,” but has allocated the profit it earns from more than 800 stores based in Russia, along with $3 million, to contribute to the humanitarian efforts aiding those affected. It is offering free Whopper meal vouchers for Ukrainian refugees, according to BBC News.
McDonald's, Coca-Cola and Starbucks, who has confirmed 100 shutdowns in Russia, have committed to continue paying their employees despite the closings. The coffee chain, who has also ceased its product shipments into the country, will make the payments to 2,000 staff members through its Kuwait-based licensee, Alshaya Group, BBC News reported.
Coca-Cola’s Russian-based operations makeup roughly 2% of the company’s operating revenue and income. The company also owns a 20% stake in Russia’s overall bottling and distribution process. Its rival, Pepsi, has also decided to halt its production and sales in the country, according to BBC News.
BBC News also reported that other industries have also opted against supporting Russia, including the beer market Heineken, tobacco companies such as Imperial Brands and various others.