After 32 years of business in Russia, McDonald’s has confirmed its decision to permanently shut down all of its restaurants across the country, CNBC reported.
“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values,” the company confirms, according to a CNBC report.
The burger chain, who wrote off its exit for a value of $1.2 billion to $1.4 billion, paid a significant price of $127 million for its departure last quarter. Its Russian-based restaurants were said to make up about 9% of its total revenue in 2021.
Local McDonald's CEO Chris Kempczinski said he was proud of all of the company’s 62,000 workers employed in Russia, expressing that the decision to shut down was “extremely difficult.” He confirmed that all employees will continue receiving payments until the transaction is completed, and that they'll “have future employment with any potential buyer.”
The first-ever construction of a McDonald's restaurant in the Soviet Union, completed in January 1990, came at a time when Russians were very hungry and looking forward to having the foreign food for the first time. McDonald's was one of the few Western businesses to make it to the Soviet Union at that time. At that time, a single meal cost a half a day's wages, but they still wanted to try the new food anyway.
According to CNBC, after the company announced temporary closings in early March, customers could be seen forming long lines outside more than 800 locations amid their uncertainty about whether they will ever get the chance to eat at the fast-food place again. Though the context differs, the announcement prompted a similar sight from when the brand launched. This time, it symbolizes the success the brand has garnered in the country overtime.
“To a generation of Russians, McDonald’s — commonly referred to as MakDak — was a fascinating phenomenon,” Eurasia specialist, Bakhti Nishanov, said, according to CNBC. “Clearly connected to the American culture, yet very much part of their daily lives and, in a way, less foreign or alien than many other brands.”
McDonald’s serves as one of countless Western brand adoption and foreign investments made by Russia, most of which have ceased since Russia’s invasion of Ukraine.
Nishanov, who specializes in a variety of analytical and public diplomacy related tasks, considers the occurrence “truly weird.”
“It’s almost like hope leaving the country,” he said.
Nishanov said McDonald's leaving Russia "is an explicit signal that the country is no longer a place you want to be in as a business."