“McDonald’s has made the decision to temporarily close all of our restaurants in Russia and suspend all market operations,” McDonald’s CEO Chris Kempchinski said Tuesday.
According to the investor’s document, at the end of last year there were 847 McDonald’s outlets in Russia.
Worldwide, most McDonald’s (MCD) locations are operated by franchise operators. But this is not the case in Russia, where, according to the document, 84% of locations are operated by the company. According to the document, Russian restaurants, as well as another 108 restaurants in Ukraine owned by McDonald’s, brought in 9% of the company’s revenue in 2021.
“We employ 62,000 people in Russia who have put their heart and soul into our McDonald’s brand to serve their communities. We work with hundreds of local Russian suppliers and partners who produce products for our menu and support our brand,” said Kempchinski. . “And every day we serve millions of Russian customers who rely on McDonald’s. In over thirty years of McDonald’s in Russia, we have become an important part of the 850 communities in which we operate.”
But, he added, “at the same time, our values mean that we cannot ignore the senseless human suffering going on in Ukraine.”
Several Western companies from various industries ceased operations in Russia after the country’s attack on Ukraine.
However, some major food players continue to sell their products in the country.
Critics of Russia’s actions are putting pressure on some of these brands to leave the country.
But food companies have a number of reasons to stay in Russia, while many other businesses are turning their backs on them. The supply chain can be more complex for food retailers than in other industries. Many restaurant chains are run by franchises, giving corporate owners less control. Beverage manufacturers such as Coca-Cola rely on regional bottlers and distributors to sell their products.
Supporters of preserving the food industry in Russia feel they have a duty to stay and fear the consequences of such a move for Russian citizens, many of whom want nothing to do with the war.
Food companies in Russia
Coca-Cola (CO) products are sold in Russia through an independent bottler, Coca-Cola Hellenic Bottling. During a February 22 discussion on full-year earnings results, Coca-Cola HBC CEO Zoran Bogdanovich pointed to Russia and Ukraine as an important growth driver. “We continue to deliver strong results in Nigeria, Russia and Ukraine, with all three companies now up over 20% in sales compared to 2019,” he said.
Coca-Cola HBC and Coca-Cola did not respond to requests for comment on their activities in Russia, but Bogdanovich’s statement appeared on his company’s website.
“Our thoughts are with all those affected and we are doing everything we can to support our people, their families and humanitarian efforts in Ukraine and the region,” he wrote, adding that along with Coca-Cola, his company has donated one million euros. Red Cross in Ukraine and offers additional support to neighboring countries and Ukrainian staff.
However, the letter does not mention Russia or how the company is progressing there.
In 2020, PepsiCo’s net revenue in Russia was about $3 billion. PepsiCo (PEP) did not immediately respond to a request for comment on its activities in Russia.
Some people have strong opinions about how these companies should operate.
Twitter users use #boycottCoke and #boycottPepsi because of the companies’ activities in Russia.
McDonald’s also came under fire ahead of its Tuesday announcement. Twitter users posted messages with the hashtag #boycottMcDonalds, and New York State Comptroller Thomas DiNapoli called the company.
Before McDonald’s made its announcement, DiNapoli sent an email to a number of companies represented in the New York State General Pension Fund, including PepsiCo and McDonald’s, urging them to stop doing business with Russia.
“Companies like McDonald’s and PepsiCo, which have a large presence in Russia, need to consider whether doing business in Russia is worth the risk during this extremely volatile time,” DiNaPoli said in a statement.
Danone and Yum stay put
Danone (DANOY), which produces Silk milk substitutes, Activia, Oikos yogurt, baby food and more, shared information about its activities in Russia. In a LinkedIn post on Sunday, the company said it and its employees “express our solidarity with the people who are now suffering the atrocities of war,” adding that it “made a €500,000 donation to the Red Cross.”
The company detailed its plan for Russia.
“We have made the decision to suspend all investment projects in Russia,” the company said, “but we are currently continuing the production and distribution of fresh dairy products and baby food in order to continue to meet the basic food needs of the local population.”
The company also stated that “this war can go on for a long time. If so, this will lead to increased difficulty for the affected population in obtaining basic commodities.”
Unilever (UL) made a similar announcement this week, saying that “we will continue to deliver our everyday basic food and hygiene products made in Russia to the people in the country”, adding that “we will keep this under close scrutiny.”
But the company said it has suspended imports of its products to Russia and is halting all investment in the country, in addition to halting exports from there. He stated that he would not benefit from his presence in Russia.
Yum Brands (YUM), which owns KFC, Pizza Hut, Taco Bell and Habit Grill, said in a statement that it has “suspended all investment and restaurant development in Russia.”
The company added that “it will direct all profits from operations in Russia to humanitarian needs,” and will also make donations to the Red Cross through the Yum Brands Foundation. Yum has about 1,000 KFC restaurants and 50 Pizza Huts in Russia. The company said that most of them are operated by independent owners.
Farril Bertmann, a registered dietitian and senior lecturer in the Department of Nutrition and Food Sciences at the University of Vermont, warned that if the big food companies left Russia, the civilian population could be affected even if they have other sources of food.
“I strongly believe that people should be given the opportunity to buy a variety of products at different prices,” she said. “This can only be done successfully with access.”
Bertmann noted that Coca-Cola and Pepsi produce more than just sugary sodas.
Coca-Cola sells water, juices, milk and other drinks. PepsiCo makes a range of non-carbonated beverages, owns Quaker oats and snacks, and other food brands.
“Ultimately, products need to be available,” she said. “And I would be very concerned if the food environment [were] change drastically.”
– CNN’s Robert North contributed to this report.