McDonald’s says that it stands to lose around $50 million each month after suspending its operations in Russia. The company did so following increased pressure, a boycott, and facing trouble in the stock market. The company, along with hundreds of other international companies, has suspended its operations in Russia due to the country’s invasion of Ukraine.
At a Glance
- Russia’s Invasion of Ukraine has caused hundreds of international companies to suspend services and business in the country as a form of Economic Isolation.
- McDonalds makes a fourth quarter net income of $1.64 billion
- The Fast food Giant Took Action Following a brewing Boycott
McDonald’s Has about 850 Locations in Russia
McDonald’s announced that it would shut down businesses in Russia but continue to pay employees. According to MSNBC, the majority of locations in Russia are owned by McDonald’s itself, not franchises.
Other food companies that operate out of the US but do business in Russia have also suspended business. Starbucks, Yum Brands, and Papa Johns have all withdrawn their business for the time being.
McDonald’s CFO Kevin Ozan has noted that while the company is still calculating the exact cost this will take on the business, the current estimate is around $50 million a month.
“We expect this to be temporary and we certainly don’t take this decision lightly, but for us this is about doing what we think is the right thing to do, both for the global business and for our people locally,” he said.
McDonald’s and Coca-Cola Both Came Under Fire for Continuing to Operate in the Country
But for many people, this came too late. The fast-food giant decided to cut its ties with Russia only after a boycott plan caught steam.
In a statement sent out to employees, McDonald’s CEO Chris Kempczinski announced the move.
“As we move forward, McDonald’s will continue to assess the situation and determine if any additional measures are required. At this juncture, it’s impossible to predict when we might be able to reopen our restaurants in Russia,” Kempczinski continued “We are experiencing disruptions to our supply chain along with other operational impacts. We will also closely monitor the humanitarian situation.”
Coca-Cola also came under fire and also announced Monday that it would stop production in Russia. The company released a statement on its website that “our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine.”
Just like McDonald’s, the company will continue to monitor the situation.
Right now, the invasion in Ukraine is very much ongoing, with more than 2 million people displaced.