The Kremlin towers and passers-by are displayed in the window of a closed McDonald’s restaurant in Moscow on May 16, 2022.
Natalia Kolesnikova | AFP | Getty Images
McDonald’s said on Thursday that it had struck a deal to sell its Russian business to Alexander Govar, its current licensee in the market.
Govor will acquire all McDonald’s businesses in Russia and will operate under the new brand. He also agreed to keep employees for at least two years on equivalent terms and to finance the salaries of corporate employees working in 45 regions of the country until the deal is closed and existing commitments to suppliers, landlords and utilities.
The financial terms of the deal are not disclosed.
McDonald’s said Monday that it expects to record non-cash costs of $ 1.2 billion to $ 1.4 billion related to net investment in Russia and foreign exchange losses.
Sales are expected to close in the coming weeks if approved by regulators. This marks the end of an era for the fast food giant, which first entered the country a few months before the collapse of the Soviet Union.
“McDonald’s in Russia has embodied the very notion of publicity and has become extremely important,” CEO Chris Kempczynski wrote in a letter to McDonald’s on Monday after the company announced its intention to sell.
In the three decades since opening its first branch in Moscow, McDonald’s has increased its Russian business to about 850 seats. The company owned about 84% of these restaurants, the rest were run by franchisees. Owning more restaurants brings the company more income, but opens it up to more risk in times of turmoil or economic downturn.
In early March, after the Kremlin invaded Ukraine, McDonald’s said it would temporarily close its Russian branches. In late April, the company said the suspension of its operations in Ukraine and Russia due to the war had cost it $ 127 million in the first quarter. And on Monday, he revealed that he plans to sell the business.
“Some may argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is certainly right. But the humanitarian crisis caused by the war in Ukraine cannot be ignored,” Kempczynski said in a letter. .
Other Western companies have also decided to sell their Russian businesses, including automaker Renault and oil giant Exxon Mobil.
Govor operates 25 McDonald’s locations in Siberia and has been a licensed fast food chain since 2015.