Chicago / IL. (mdc) After more than 30 years of operations in the country, McDonald’s Corporation announced it will exit the Russian market and has initiated a process to sell its Russian business. This follows McDonald’s announcement on March 08, 2022, that it had temporarily closed restaurants in Russia and paused operations in the market.
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.
As part of McDonald’s decision to exit, the Company is pursuing the sale of its entire portfolio of McDonald’s restaurants in Russia to a local buyer. The Company intends to initiate the process of «de-Arching» those restaurants, which entails no longer using the McDonald’s name, logo, branding, and menu, though the Company will continue to retain its trademarks in Russia. McDonald’s priorities include seeking to ensure the employees of McDonald’s Russia continue to be paid until the close of any transaction and that employees have future employment with any potential buyer.
McDonald’s President and CEO, Chris Kempczinski, said, «We have a long history of establishing deep, local roots wherever the Arches shine. We’re exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald’s make this announcement extremely difficult. However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there.»
McDonald’s restaurants in Ukraine remain closed while the Company continues to pay full salaries for its employees in the country and continues to support local relief efforts led by Ronald McDonald House Charities. Across Europe, the McDonald’s System is supporting Ukrainian refugees through food donations, housing and employment.
As a result of its exit from Russia, the Company expects to record a charge, which is primarily non-cash, of approximately USD 1.2 to 1.4 billion to write off its net investment in the market and recognize significant foreign currency translation losses previously recorded in shareholders’ equity.
The Company reaffirms its prior 2022 Outlook with the following updates:
- The Company expects operating margin to be in the 40 percent range as a result of the charge for Russia. Excluding impairment and other strategic charges, the Company expects adjusted operating margin to be in the mid-40 percent range.
- Excluding the closure of all restaurants in Russia, the Company expects:
- net restaurant unit expansion will contribute about 1.5 percent to 2022 Systemwide sales growth in constant currencies.
- over 1,300 net restaurant additions in 2022.
- The Company expects 2022 capital expenditures to be approximately USD 2.1 to USD 2.3 billion.
McDonald’s is the world’s leading global foodservice retailer with more than 39,000 locations in over 100 countries. Approximately 95 percent of McDonald’s restaurants worldwide are owned and operated by independent local business owners.
Addendum: McDonald’s agrees to sell Russian business to current licensee
Chicago / IL. (05.19. / mdc) Following the announcement above that it will exit the Russian market and has initiated a process to sell its Russian business, McDonald’s announced on May 19 that it has entered into a sale and purchase agreement with its existing licensee Alexander Govor. Under this agreement, Govor will acquire McDonald’s entire restaurant portfolio and operate the units under a new brand. Since 2015, Govor has served as McD licensee and has operated 25 restaurants in Siberia. The agreement remains subject to certain conditions, including regulatory approval, with closing expected to occur in the coming weeks. The sale and purchase agreement provides for employees to be retained for at least two years, on equivalent terms. The buyer has also agreed to fund the salaries of corporate employees who work in 45 regions of the country until closing, as well as fund existing liabilities to suppliers, landlords and utilities.