McDonald’s Corp announced on Tuesday (March 8) that it will temporarily close all 847 of its restaurants in Russia as a protest against Russia’s ‘military operation’ in Ukraine. Following Russia’s invasion of Ukraine, western countries have imposed sanctions on Russia to cripple its economy. Other global brands have also paused operations in the country to add to the pressure. McDonald’s said it would continue to pay its 62,000 employees in Russia. Chris Kempczinski, the company’s CEO, said, ‘Our values mean we cannot ignore the needless suffering unfolding in Ukraine’.
McDonald’s closure is especially significant due to its size and global reach. Whenever it takes a stand on an issue or makes a major operational change, it is often copied by other companies. It will also have symbolic significance in Russia, where its first location, in central Moscow in 1990, became an iconic symbol of burgeoning American capitalism after the fall of the Soviet Union.
After the fall of the Berlin Wall, McDonald’s opened its first location in Moscow, introducing Western culture to Russia after the Cold War. The move by McDonald’s into the Soviet Union was part of a wider message of opening up and fostering trust and cooperation between the West and Russia, according to Paul Musgrave, an assistant professor at the University of Massachusetts Amherst.
‘And now those avenues have all been closed off. And so Russia’s having McDonald’s exit that market really brings a bookend or close to that era. And we’re kind of standing in, symbolically at least, a new era of division between Russia and much of the rest of the world,’ Musgrave added.
‘I think there is going to be a little bit of a noticeable hit to McDonald’s bottom line. In their 2020 annual report, they had $500 million of assets denominated in rubles that they had to look out for. International business accounts for more than half of McDonald’s corporate revenue. Russia is a smaller part of that, but it is a real part of it. So there is a real hit,’ Musgrave said.
McDonald’s is not the only international company to halt operations in Russia. Coca-Cola and Starbucks have also done so. Previously, brands like Visa, MasterCard, Nike, Netflix, Alphabet, and Apple suspended sales or operations in Russia.
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