Two months after the fall of the Berlin Wall in 1989, McDonald’s – the symbol of Western capitalism – opened its first store in the Soviet Union. It was a big moment and the restaurant attracted a lot of people.
More than 30 years later, amid pressure from US consumers to protest Russia’s invasion of Ukraine, McDonald’s announced last month that it would temporarily close all 850 stores in Russia.
Starbucks, PepsiCo and Coca-Cola also announced plans to cease operations in Russia, and Yum Brands, which operates around 1,000 KFC restaurants and 50 Pizza Hut locations in Russia, halted all investment and restaurant development in the country a.
Since then, more than 750 companies have restricted their activities in Russia.
McDonald’s has also temporarily closed its 108 locations in Ukraine for security reasons. Russia and Ukraine together account for about 2% of McDonald’s global sales and less than 3% of operating income.
There’s no telling when or if McDonald’s will resume operations in Russia and Ukraine, but the company is suffering from the bottom line. The company announced during its first quarter that the closures will cost McDonald’s $27 million in leases, vendor costs and employee wages, and an additional $100 million in unsold inventory. Collectively, those expenses dragged first-quarter earnings down 13 cents per share.
In the meantime, the fast-food chain has committed to continue paying its employees in both countries.
Watch the video to learn more about the impact of McDonald’s departure from Russia.