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McDonald’s, Starbucks, Coke, GE pull out of Russia over war

  • ASSOCIATED PRESS
                                A sign was displayed outside a McDonald’s restaurant, April 27, in Des Moines, Iowa. McDonald’s said, today, it is temporarily closing all of its 850 restaurants in Russia in response to the country’s invasion of Ukraine. The burger giant said it will continue paying its 62,000 employees in Russia.

    ASSOCIATED PRESS

    A sign was displayed outside a McDonald’s restaurant, April 27, in Des Moines, Iowa. McDonald’s said, today, it is temporarily closing all of its 850 restaurants in Russia in response to the country’s invasion of Ukraine. The burger giant said it will continue paying its 62,000 employees in Russia.

DETROIT >> McDonald’s, Starbucks, Coca-Cola and General Electric — ubiquitous global brands and symbols of U.S. corporate might — all announced today they were temporarily suspending their business in Russia in response to the country’s invasion of Ukraine.

“Our values mean we cannot ignore the needless human suffering unfolding in Ukraine,” McDonald’s President and CEO Chris Kempczinski said in an open letter to employees.

The Chicago-based burger giant said it will temporarily close 850 stores but continue paying its 62,000 employees in Russia “who have poured their heart and soul into our McDonald’s brand.”

Kempczinski said it’s impossible to know when the company will be able to reopen its stores.

“The situation is extraordinarily challenging for a global brand like ours, and there are many considerations,” Kempczinski wrote in the letter. McDonald’s works with hundreds of Russian suppliers, for example, and serves millions of customers each day.

Last Friday, Starbucks had said that it was donating profits from its 130 Russian stores — owned and operated by Kuwait-based franchisee Alshaya Group — to humanitarian relief efforts in Ukraine. But today, the company changed course and said it would temporarily close those stores. Alshaya Group will continue to pay Starbucks’ 2,000 Russian employees, Starbucks President and CEO Kevin Johnson said in an open letter to employees.

“Through this dynamic situation, we will continue to make decisions that are true to our mission and values and communicate with transparency,” Johnson wrote.

Coca-Cola Co. announced it was suspending its business in Russia, but it offered few details. Coke’s partner, Switzerland-based Coca-Cola Hellenic Bottling Co., owns 10 bottling plants in Russia, which is its largest market. Coke has a 21% stake in Coca-Cola Hellenic Bottling Co.

General Electric also said in a Twitter post that it was suspending its operations in Russia. GE said two exceptions would be essential medical equipment and support for existing power services in Russia.

McDonald’s is likely to take the biggest financial hit. Unlike Starbucks and other fast food companies, like KFC and Pizza Hut, whose Russian locations are owned by franchisees, McDonald’s owns 84% of its Russian stores. McDonald’s has also temporarily closed 108 restaurants that it owns in Ukraine and continues to pay those employees.

In a recent regulatory filing, McDonald’s said its restaurants in Russia and Ukraine contribute 9% of its annual revenue, or around $2 billion last year.

Yum Brands, the parent company of KFC and Pizza Hut, said Monday that it is donating all of the profits from its 1,050 restaurants in Russia to humanitarian efforts. It has also suspended new restaurant development in the country. Burger King said it is redirecting the profits from its 800 Russian stores to relief efforts and donating $2 million in food vouchers to Ukrainian refugees.

McDonald’s said today it has donated more than $5 million to its employee assistance fund and to relief efforts. It has also parked a Ronald McDonald House Charities mobile medical care unit at the Polish border with Ukraine; another mobile care unit is en route to the border in Latvia, the company said.

When McDonald’s opened its first store in Moscow, in Jan. 31, 1990, it was hailed as a sign of the thawing Cold War. Thousands of Russians lined up before dawn to try hamburgers — many for the first time. By the end of the day, 30,000 meals had been rung up on 27 cash registers, an opening-day record for the company.

But since the Ukraine invasion last month, many corporations have ceased operations in Russia in protest. Among them is consumer goods conglomerate Unilever, which today said it has suspended all imports and exports of its products into and out of Russia, and that it will not invest any further capital into the country. In a more limited move, Amazon said today the company’s cloud computing network, Amazon Web Services, will stop allowing new sign-ups in Russia and Belarus.

Pressure had been mounting on companies that remained in the country. Hashtags to boycott companies like McDonald’s, Coca-Cola and PepsiCo quickly emerged on social media.

Last week, New York State Comptroller Thomas DiNapoli — a trustee of the state’s pension fund, which is a McDonald’s investor — sent a letter to McDonald’s and nine other companies urging them to consider pausing their operations in Russia.

In a statement today, DiNapoli commended McDonald’s for its action.

“As one of the largest domestic corporations doing business in Russia, McDonald’s suspension of operations there should send a strong message to other companies,” DiNapoli said. “Russia’s attack on Ukraine, its violent imperialism, threatens the global economy and makes doing business there extraordinarily risky if not untenable.”

In his letter, Kempczinski cited influential former McDonald’s Chairman and CEO Fred Turner, whose mantra was, “Do the right thing.”

“There are countless examples over the years of McDonald’s Corp. living up to Fred’s simple ideal. Today is one of those days,” Kempczinski said.

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