McDonald’s is a highly-popular fast food chain that is beloved by millions. In Russia, it opened its doors in 1990, providing millions with its addictive food. For three decades, the American chain maintained consistent success, but the Russian invasion earlier this year forced McDonald’s to halt business.
Despite the temporary suspension, the fast food chain continued to compensate its Russian employees. However, keeping the corporate and franchise-owned locations became too risky, and McDonald’s announced the suspension would be permanent.
“We have a commitment to our global community and must remain steadfast in our values,” said CEO Chris Kempczinski. “Our commitment to our values means that we can no longer keep the Arches shining there.”
CFO Kevin Ozan said at the UBS Global Consumer and Retail Conference that the move was expected to cost the restaurant $50 million monthly based on multiple sources like Reuters and CNBC. The chain was put up for sale, but CNN reported that it had been purchased by a local licensee. Restaurateur Alexander Govor, who operates 25 restaurants, bought McDonald’s and will now operate 850 more. While his newly-bought restaurants will no longer have ties with the McDonald’s brand, it will still provide Russians American fast food, albeit under a new name.
Govor’s restaurants will continue to retain its trademarks in Russia without the logo, branding, and menu of McDonald’s. His goal is to resume operations in June while keeping the previous jobs, relationships with the suppliers in the country, and menus.
The McDonald’s name remains trademarked in Russia, and the company has no plans of giving it up, giving Govor the freedom to choose a different name. While he is still in the decision-making process, Russia’s Rospatent agency revealed that the potential name is narrowed down to Fun and Tasty, The Same One, Just Like That, and Open Checkout.
McDonald’s also closed 108 locations in Ukraine for the time being, which accounts for 2% of its sale, 9% of its revenue, and 3% of its operating income. American Cafe Starbucks also joined the Russia exit, marking an end to 15 years of operation. Following McDonald’s example, Starbucks will pay its employees in Russia for six months and assist them in transitioning to new opportunities outside of the brand.