Starbucks, McDonald’s withdraw from Russia as war erupts in Ukraine

starbucks announced that it would permanently close its operations in Russia this week with McDonald’s, which previously stopped trading in Russia in March. The news comes amid the exit of Western companies from Russia, including tech giant Apple and furniture retailer IKEA.

After Russia’s invasion of Ukraine, Russian Western companies are rushing for an exit, marking the end of decades of economic, political and diplomatic cooperation between the state and the West.

A month after Russia invaded Ukraine in February 2022, Starbucks and McDonald’s followed other major global brands to announce temporary closures of their operations in Russia. In a scene reminiscent of a Korean hamburger chain in 1990, consumers hurry Despite the cold winter, we headed to the McDonald’s restaurant for one last meal before closing.

According to CNN, the temporary closures in both Russia and Ukraine cost McDonald’s $127 million. This includes $100 million for discarded food and inventory, and $27 million to cover employee expenses and rental and supply payments. The closure affected McDonald’s net profit. 28% drop for the first three months of the year.

On May 16, the company announced that it would permanently close the Russian restaurant temporarily. “Due to the humanitarian crisis caused by the war in Ukraine and the unpredictable operating environment, McDonald’s has come to the conclusion that continuing ownership of the business in Russia can no longer be sustained and is inconsistent with McDonald’s values,” the company said. statement.

The company later found a buyer from a Russian businessman. Alexander Gober, he already runs 25 McDonald’s stores in Siberia. About 850 Russian restaurants will be open. new name, with the same 62,000 employees. McDonald’s is busy getting rid of all the golden arches at the top of the restaurant and associated brands. This process is called “de-Arching”.

A week later, Starbucks followed in McDonald’s footsteps. presentation “Exit and no longer stand for the brand [Russian] Mayor”. The cafe chain said in a statement that it would continue to pay salaries to its 2,000 employees over six months.

Coffee mugs are displayed in a basket at the newly opened Starbucks store in the Khimki-Mega shopping mall near Moscow, Russia on September 6, 2007.

Dmitry Veliakov—Bloomberg/Getty Images

symbol of American capitalism

The road for Seattle-based Starbucks to enter Russia in 2007 was paved by pioneer McDonald’s. McDonald’s opened his first store in 1990 on Pushkin Square in Moscow, then Soviet Union. Hundreds of people lined up to place their first order. Burger chains with a Big Mac (or Bolshoi Mac locally) for 3.85 rubles; Equivalent to 2 hours and 30 minutes Work for the average earner in the country.

It was not easy for a Chicago-based restaurant chain to join the Soviet Union in December 1991, nearly two years before the fall of the Communist State, and it was the result of 14 years of arduous negotiations. According to Washington postThe company has invested $35 million in a meat processing, dairy and confectionery plant outside Moscow. The ominous exterior of this factory earned it the name “McGulag” among visitors.

The entry of McDonald’s into the Soviet Union, a symbolic symbol of American capitalism, symbolically shows that tensions between the USSR and the US have been further relaxed. Taking the role of Soviet leader in 1985, Mikhail Gorbachev initiated an unprecedented process of change in the country, including democratizing the political system, lifting restrictions on freedom of expression, and partially decentralizing the economy.

mcdonalds moscow ussr

Soviet customers wait in line outside a just-opened Soviet McDonald’s on Pushkin Square in Moscow on January 31, 1990.

Vitaly Armand – AFP/Getty Images

Most famously, he developed partnerships with Western rivals, including signing the historic Intermediate-Range Nuclear Forces Treaty with US President Ronald Reagan in 1987 and withdrawing Soviet troops from Afghanistan between 1988 and 1989. Gorbachev oversaw the fall of the unpopular communists over the next few years. The regime of the Soviet bloc and the eventual dissolution of the Soviet Union in 1991.

In the next 32 years, McDonald’s in Russia expanded to 847 restaurants employing 62,000 people. After the fall of the Soviet Union in 1991 and the state’s rejection of communist economic policies, other Western companies flourished in Russia. Apple, Nike, Starbucks and Coca Cola have all flocked to Russia to cater to new consumers.

Starbucks, which opened its first coffee shop in Russia in September 2007, has expanded to 130 stores and employs 2,000 people. The store was operated by a licensee, less than 1% of the company’s annual global revenue.

According to ReutersBefore the outbreak of the Ukrainian War, McDonald’s stores in Russia and Ukraine earned about $310 million a year.

More stories to read at TIME

Contact us to [email protected]

Leave a Comment