McDonald’s has reached a deal to sell all its restaurants in Russia to one of its licensees in the country, the businessman Alexander Govor, who will operate them under a new name.
The fast food company temporarily closed hundreds of outlets across Russia in March after Vladimir Putin launched his invasion of Ukraine, a decision that has cost McDonald’s about $55m (£44m) a month.
On Monday, it announced it would sell those stores and leave Russia, saying the humanitarian crisis caused by the war and the unpredictable operating environment meant continuing running restaurants there was “no longer tenable” or “consistent with McDonald’s values”.
Govor, who operates 25 restaurants in Siberia, has agreed to buy its 850 Russian restaurants and run them under different branding, McDonald’s said on Thursday.
McDonald’s did not disclose how much the outlets were sold for. Last year, its Russian operations contributed 9% of the company’s total annual sales, or about $2bn.
Govor, a licensee since 2015, has agreed to retain McDonald’s 62,000 Russian employees for at least two years on equivalent terms and to fund existing liabilities to suppliers, landlords and utilities. He also agreed to pay the salaries of McDonald’s corporate employees until the sale is completed.
The sale is subject to regulatory approval but is expected to close within a few weeks, McDonald’s said.
Govor is also half-owner of Neftekhimservis, a construction investor that owns an oil refinery in Siberia, and is a board member of another firm that owns projects in Siberia including Novokuznetsk’s Park Inn hotel and private clinics.
McDonald’s was among the first western consumer brands to enter Russia in 1990. Its large, gleaming store near Pushkin Square in Moscow, which opened shortly after the fall of the Berlin Wall, signalled a new era of optimism in the wake of the cold war.
It’s the first time the company has “de-arched,” or exited a major market. It plans to start removing golden arches and other symbols and signs with the company’s name. McDonald’s said it will will maintain its trademarks in Russia and take steps to enforce them if necessary.
It’s unclear if other US chains will follow McDonald’s lead and leave Russia. McDonald’s owned 84% of its Russian stores, which gave it more control over operations than many of its rivals whose stores are owned by franchisees.
Starbucks’ 130 Russian stores have been closed since early March. Its franchisee in the country, Kuwait-based Alshaya Group, is continuing to pay its 2,000 Russian employees.
Papa John’s suspended corporate operations in Russia and is no longer accepting royalty payments from its 185 stores there. But the stores, which are owned by Colorado-based entrepreneur Christopher Wynne, remain open. A message was left Thursday with one of Wynne’s companies.
McDonald’s left open the possibility that it could one day return to Russia.
“It’s impossible to predict what the future may hold, but I choose to end my message with the same spirit that brought McDonald’s to Russia in the first place: hope,” the chief executive, Chris Kempczinski, wrote in a letter to employees. “Thus, let us not end by saying, ‘goodbye.’ Instead, let us say as they do in Russian: until we meet again.”
