High street chains pause business in Russia

By James McAllister

- Last updated on GMT

High street chains McDonald's, Starbucks and Pizza Hut pause business in Russia following boycott threats

Related tags: Casual dining, QSR, Multi-site, Mcdonald's, Starbucks, Russia

High street hospitality chains including McDonald's, Starbucks and Pizza Hut have announced they will pause business in Russia following its invasion of Ukraine.

Foodservice brands had been facing calls​ ​to follow the example of major Western companies including Nike, Apple and IKEA, and suspend operations in the country, with people on social media threatening to boycott businesses continuing to sell in Russia. 

Amid the growing pressure, McDonald's, Starbucks and Yum! Brands, which collectively have thousands of locations across Russia, have now all announced they will halt business in the country.

McDonald's decision to temporarily close its restaurants is particularly symbolic. The fast food giant first opened in Russia on 31 January 1990, a move that was hailed at the time as a sign of thawing Cold War relations.

The chain has 847 stores in Russia, and the country accounts for roughly 9% of its global revenue and 3% of its operating income. Interestingly, unlike many other chains the majority of McDonald's Russia estate is owned and operated by the company rather than franchisees.

McDonald's chief executive Chris Kempczinski said it was 'impossible to predict' when it would reopen in Russia, but added that the business would continue paying salaries to its 62,000 employees in the country.

Starbucks CEO Kevin Johnson said the coffee company had decided to suspend all business activity in Russia, including shipment of all Starbucks products. The group has around 130 locations in Russia, all of which are owned and operated by the Kuwaiti conglomerate Alshaya Group through a licensing agreement.

The coffee company’s licensed partner has agreed to pause store operations and will provide support to the nearly 2,000 partners in Russia.

Yum! Brands, which has one of the largest footprints in Russia, said it was suspending KFC company-owned restaurants in Russia and finalising an agreement to suspend all 50 Pizza Hut outlets in partnership with its master franchisee.

However, the suspension of operations does not appear to include the circa 1,000 KFC restaurants in Russia run by independent franchisees.

Yum! had already previously suspended all investment and restaurant development in Russia, and said it would donate all profits from its Russian operations to humanitarian efforts.

According to the BBC​, fast-food chain rival Burger King has not said it will stop its operations in Russia. It committed $3m (£2.3m) to support Ukrainian refugees and said people feeling to European nations could get free Whopper meal vouchers.

Restaurant Brands International, which owns Burger King, said it would redirect its profits from more than 800 franchised operations in Russia to humanitarian relief.

Related topics: Business & Legislation, Casual Dining

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