Western exodus from Russia continues as McDonald’s closes shop and Renault sells Lada for a rouble

Published On: May 18, 2022Categories: Stocks & Shares2.2 min read

McDonald’s has announced that it is withdrawing from Russia more than 30 years after opening its first restaurant on Moscow’s Pushkin Square. The company said it has started to process of looking for a local buyer for its entire chain of around 850 restaurants around Russia. Job security for the chain’s 62,000 employees in the country, it said as part of the announcement, is a priority for any agreement.

The fast food company known for its golden arches and Ronald McDonald clown character is, alongside U.S. brands like Coca-Cola, one of the most recognisable symbols of western democratic capitalism. As such, its entry onto the Russian market after the end of the Cold War and dismantling of authoritarian Soviet communism was seen as highly symbolic.

But McDonald’s will no longer be serving Big Macs or Chicken McNuggets in Moscow or any other Russian city or town. The company joins a list of western brands to withdraw from the country, whose size makes it a significant market, since Russia invaded neighbouring Ukraine at the end of February.

McDonald’s had paused operations in Russia in March when it closed its 847 branches in the country but until now had left the door open to starting operations again. That now won’t happen and the company will, if the situation changes and it re-enters Russia in future years, have to rebuild from scratch.

A company statement read:

“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values.”

McDonald’s chief executive Chris Kempczinski added that the

“dedication and loyalty to McDonald’s of employees and hundreds of Russian suppliers made it a difficult decision to leave. However, we have a commitment to our global community and must remain steadfast in our values, and our commitment to our values means that we can no longer keep the arches shining there.”

McDonald’s also has around 100 restaurants in Ukraine. They are also closed for the time being though workers continue to be paid. The company is also helping support refugees who have left Ukraine and fanned across Europe through a number of initiatives.

The McDonald’s share price remained relatively flat yesterday on the announcement, down just 0.4%.

The French carmaker Renault has also told investors it has agreed a deal to sell the majority 68% stake it owns in AvtoVaz the parent company of Lada and acquired over 10 years ago for $1 billion. The deal was signed by disgraced former Renault-Nissan boss Carlos Ghosn and the Russian president Vladimir Putin.

Renault is selling the holding to Russia’s Central Research and Development Automobile and Engine Institute for just a single rouble – less than a penny. However, the French carmaker does have the option to rebuy its share at any point over the next six years.

About the Author: Jonathan Adams

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