McDonald’s, Coca-Cola, and Starbucks have suspended operations in Russia Tuesday, following public pressure and calls to boycott because of not halting business in Russia amid the Russian invasion of Ukraine.
Major international corporations are taking sanctions against Russia’s actions, their actions range from suspending operations until further notice to pulling out of Russia altogether.
850 McDonald’s stores will temporarily close in Russia. Starbucks is closing about 130 outlets in the country after the two big brands had taken heat for staying silent on the war on Ukraine now that it is entering it 13 days.
According to McDonald’s CEO Chris Kempczinski, the chain will continue to pay its 62,000 Russian employees. Its Ronald McDonald House Charities will continue to operate; Starbucks said it would support its nearly 2,000 employees living in Russia.
The 130 outlets of Starbucks in Russia and Ukraine are all licensed locations, so the Seattle-based company itself doesn’t operate them. Cowen analyst Andrew Charles estimated that they account for less than 1% of Starbucks’ global revenue. The pause on business activity includes shipping Starbucks products, and its licensee will temporarily shutter the stores.
Recently, the two brands have drawn criticism for staying silent on the war, given its relatively sizeable Russian footprint. McDonald’s restaurants in Russia and Ukraine account for 2% of its systemwide sales, roughly 9% of its revenue, and 3% of its operating income.
In a separate letter released Friday, Kevin Johnson condemned the attacks on Ukraine and vowed to donate royalties from its Russian business to humanitarian causes in the besieged nation.
“We condemn the unprovoked, unjust and horrific attacks on Ukraine by Russia, and our hearts go out to all those affected,” Johnson wrote.
Kempczinski wrote in his letter, “In the thirty-plus years that McDonald’s has operated in Russia, we’ve become an essential part of the 850 communities in which we operate,” resume “At the same time, our values mean we cannot ignore the needless human suffering unfolding in Ukraine.”.
About 84% of McDonald’s Russian locations are owned by the company, while franchisees operate the rest. Owning more of its restaurants generates more significant revenue, opening it to greater risk in times of turmoil or economic downturn.
Kempczinski said it is impossible to predict when McDonald’s would open its Russian restaurants. The company is experiencing supply chain disruptions and other operational challenges.
It is known that McDonald’s opened its first Moscow location 32 years ago, months before the Soviet Union collapsed “. Starbucks” appeared in Russia relatively recently, in 2007.