Starbucks exits Russia over war in Ukraine

After 15 years of operating its business in Russia, Starbucks will exit the Russian market, announced on Monday.

It’s following the steps of other companies like McDonald’s, Exxon Mobil, and British American Tobacco and will no longer have a brand presence in Russia.

Starbucks has 130 locations in the country, which account for less than 1% of its annual revenue; they are all licensed locations, so the Seattle-based company itself doesn’t operate them.

The company said it would pay its nearly 2,000 Russian workers for six months and help them transition to new opportunities outside the chain and help them to find jobs.

To show opposition to the Kremlin’s war with Ukraine, consumers and investors have pressured Western companies like Starbucks to cut ties with Russia, but this process will take time. Including shipments of all Starbucks products and temporarily shuttering cafes, Starbucks has suspended all business activity with the country since March 8th.

The company did not disclose the financial impact of the suspension of business operations; according to the latest quarterly results released in early May, former CEO Kevin Johnson had pledged to donate royalties from the Russian business to humanitarian causes.

On the other hand, McDonald who has been in Russia for more than 30 years, dealt with a more significant financial blow; they said the suspension of its sizable Russian and Ukrainian operations cost it $127 million in its first-quarter; the two markets accounted for 9% of its revenue in 2021, the company had 850 restaurants in Russia, most of which were operated by the company instead of licensees.

Last ¬†Thursday, McDonald’s announced it would sell those locations for an undisclosed sum to a Siberian franchisee, who will run them under a new brand.

Related Articles