McDonald’s leads fresh exodus of brands from Russia

McDonald’s on Tuesday led a new exit of the major consumer brands in western Russia, with Coca-Cola, PepsiCo, Starbucks and Unilever among those who stopped or cut operations in response to Vladimir Putin’s invasion of Ukraine.

The first McDonald’s to open in Moscow in January 1990 was seen as one of the hallmarks of the Soviet Union, with more than 30,000 people queuing to buy hamburgers.

However, on Tuesday, McDonald’s announced that it would temporarily close all of its 850 restaurants in Russia and suspend other operations in the country. Hours later, Starbucks said the local licensee who operates its 130 cafes in Russia would “stop” the operation immediately.

Coca-Cola said it was “suspending its business” in Russia shortly before PepsiCo, the beverage and snack group, announced it would stop producing and selling beverage brands including Pepsi while maintaining “essential food” sales.

Unilever has announced that it has stopped all imports and exports to and from Russia, and will stop its advertising there, but it plans to continue to supply essential food and hygiene products made in Russia.

Yum Brands, which owns more than 1,000 restaurants in Russia, said Tuesday that it is discontinuing operations of its KFC stores and ending plans to suspend its pizza hut operations in partnership with its chief franchisee.

Putin’s invasion sparked days of Discussions in the conference room How to protect workers in Russia while showing concern for Ukrainian colleagues and condemning the war.

McDonald’s will continue to pay its employees in Russia. Starbucks CEO Kevin Johnson said it would “provide support” to nearly 2,000 of its employees in the country and PepsiCo said it would strengthen its food business and allow it to support its 20,000 Russian employees.

“Consumer products [companies] They were very late for the party but they passed, “said Jeffrey Sonnenfeld, a professor at the Yale School of Management, who estimated that about 300 large companies joined what he called the” business siege. “

Companies have backed down or are now backing down because “they realized they were going to be on the wrong side of history,” he said.

Chris Kampczynski, CEO of McDonald’s, described the dilemma of executives in the West in a memorandum to staff and franchisees on Tuesday. The situation was “extraordinarily challenging” for a global brand like McDonald’s, he said.

“For 66 years, we have operated in the belief that communities improve when there is McDonald’s nearby,” he wrote, adding that the fast food chain employs 62,000 people in Russia and serves millions of customers there daily.

“At the same time, our values ​​mean that we can not ignore the unnecessary human suffering unfolding in Ukraine,” Kempchinsky said.

Russia and Ukraine together accounted for about 9 percent of McDonald’s revenue last year, or more than $ 2 billion. But the two countries have contributed less than 3% of its operating profit, as it owns most of the restaurants there, making them less profitable than its franchising operations.

“It was impossible to predict” when McDonald’s will be able to reopen its locations in Russia, Kempczynski said.

McDonald’s was the latest in a series of companies to put its business on hold in Russia, from technology groups to automakers, but the gold bows stood out as a symbol of Russia’s opening to Western brands in the post-Soviet era.

Levi Strauss’ blue jeans were once coveted in the Soviet black market and became popular after the fall of the Iron Curtain, but even this week it was announced that he would stop commercial activity in Russia.

Ramon Laguerta, CEO of PepsiCo, emailed the team that Pepsi Cola entered the Russian market at the height of the Cold War, saying it “helped create a common base between the United States and the Soviet Union.”

Consumer brands have split in response to Moscow’s invasion of Ukraine as they struggle to respond to growing pressure from Western workers, consumers and investors while doing the right thing by their Russian workers and customers.

Last Friday, the New York State Joint Pension Fund worth $ 280 billion urged McDonald’s, PepsiCo and other consumer companies to consider retiring from Russia in response to the crisis.

Another report by Polina Ivanova in London

McDonald’s leads fresh exodus of brands from Russia Source link McDonald’s leads fresh exodus of brands from Russia

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