McDonald's Shuts Down Russian Restaurants

McDonald’s Corp. MCD has announced it is shutting down its Russian restaurants.

What Happened: In an internal memo, McDonald’s CEO Chris Kempczinski acknowledged his company had 62,000 employees “who have poured their hearts and souls into our McDonald’s brand to serve their communities.” He added that during “thirty-plus years that McDonald’s has operated in Russia, we’ve become an essential part of the 850 communities in which we operate.”

Nonetheless, Kempczinski acknowledged the company could no longer “ignore the needless human suffering unfolding in Ukraine.” After consulting with Chairman Rick Hernandez and the McDonald’s board of directors, Kempczinski opted not to continue operating the company-owned restaurants in Russia.

“McDonald’s has decided to temporarily close all our restaurants in Russia and pause all operations in the market,” he continued. “We understand the impact this will have on our Russian colleagues and partners, which is why we are prepared to support all three legs of the stool in Ukraine and Russia. This includes salary continuation for all McDonald’s employees in Russia.”

Kempczinski added the company’s Ronald McDonald House Charities would continue its Russian operations, as the philanthropy is now doing through its partnerships with hospitals in Ukraine. McDonald’s is paying the full salaries for its Ukrainian employees and donated $5 million to its Employee Assistance Fund.

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Why It Happened: McDonald’s was among the high profile U.S. corporations that continued operating in Russia following the invasion of Ukraine. The fast-food chain was getting 9% of its revenue from the Russia/Ukraine markets, or roughly $2.3 billion.

Kempczinski admitted the company was “experiencing disruptions to our supply chain along with other operational impacts” prior to his announcement, and stressed that he has witnessed “extraordinary leadership by our Ukrainian and Russian teams.”

Photo: Mike Mozart/Flickr Creative Commons