Foreign McDonald’s, Domestic McDonald’s: Fast-Food Giant Leaves Russia Giving Way to New Brand

McDonald’s is selling its business to a Russian company, as reported by RIA Novosti with reference to the official message of the restaurant’s network press service. 

Picture: TheGuardian

According to RIA Novosti, after more than 30 years of work in Russia, McDonald’s is leaving the Russian market. The company has launched the process of selling the Russian business to a local company. It is noted that after the sale the new owners of McDonald’s restaurants will not receive the right to use the name, logo, brands, and menu. McDonald’s trademarks will be preserved in Russia.

As clarified, the company made the decision against the background of events in Ukraine.

“The increasing unpredictability of the operating environment has led McDonald’s to conclude that further business ownership in Russia is impractical and does not correspond to the values of McDonald’s,” the report says.

It is expected that after leaving Russia, the company will report expenses of $1.2–1.4 billion in the form of write-off of investments in the local market and losses from the difference in exchange rates. RBC confirmed that McDonald’s assets are indeed being sold, jobs are being saved. It is also planned that there will be a new brand, the opening of which is scheduled for June of this year.

Thus, the written-above means that McDonald’s is expected to sell the rights to the restaurants and all the logistics of the business. The new owner will open an adapted version of the restaurant in these restaurants, which will have a similar menu, logo, and name. At the same time, the new owner will almost certainly retain the set of products and the previous taste of all menu items, as McDonald’s production technologies in Russia relied on domestic suppliers.

This is how about 20 per cent of McDonald’s restaurants currently work – those, which are not owned by the company itself, but operate under a franchise in 22 regions of the country. Such restaurants worked even after the closure of the main restaurants and continue to cook the same dishes and menu items.

The owner of the McDonald’s franchise in Russia is LLC Razvitie Rost. It is part of the Rosinter Restaurants group. The official website of the group says that it operates restaurants “IL Patio”, “Shikary”, “Planet Sushi”, “American Bar and Grill”, “Mama Russia” and develops international brands based on the TGI FRIDAYS and Costa Coffee franchising.

It is reminded that after the sanctions imposed, McDonald’s closed 850 restaurants across Russia. Then this closure was positioned as temporary, and 62 thousand employees continued to receive salaries. Later, McDonald’s published a report for the Q1 of 2022, where losses of $127 million were recorded due to the suspension of work in Russia and Ukraine.

As GOL notes, the sale of McDonald’s assets is only part of the general trend of foreign companies – to sell the Russian part of their businesses:

  • The Danish “Carlsberg” and Dutch “Heineken” breweries announced a future sale at the end of March,
  • The Finnish coffee producer “Paulig” has already sold a business in Russia to a private investor from India,
  • The Finnish bakery company “Fazer” has already sold Russian assets,
  • The Finnish manufacturer and supplier of packaging materials and wooden structures, “Stora Enso”, has already sold three plants in Russia,
  • The Finnish dairy producer “Valio” has sold the business to the “Velkom” group of companies,
  • The Finnish food manufacturer “Raisio” has sold the business to “Copacker Agro”,
  • The French company “Renault” has just recently said “goodbye” to its assets in Russia,
  • The Russian division of the American sporting goods chain “Reebok” has been transferred to the Turkish holding “FLO Retailing”,
  • “Lukoil” will buy British-Dutch “Shell” gas stations,
  • The international tobacco company “Imperial Brands”, headquartered in England, has transferred the Russian business to local investors.

As for McDonald’s restaurants, the rights to which will be sold to Russians, the government of the country has already promised the Russian management all the necessary support in resuming the operation of restaurants and debugging business processes.

“Management will also remain. This decision was reached as a result of a series of negotiation rounds at the site of the Ministry of Industry and Trade, which were conducted by Deputy Head of the Ministry Viktor Yevtukhov,” a source told the ‘Izvestia’ newspaper.

The source of Izvestia added that the McDonald’s restaurant chain company has agreed to transfer business in Russia with one of its Russian partners, who will resume operations in the country under a new brand, which will save all jobs (62 thousand employees in more than 60 regions), unique technologies, know-how and all other assets of the company.

Ru-Main, 16.05.2022 

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