Here's How Much McDonald's Will Lose After Leaving Russia
Several brands have decided to pull out of Russia in response to the country's invasion of Ukraine. According to CNN, PepsiCo and Coca-Cola have decided to stop selling many of their goods in Russia, while Starbucks made the call to shut down its stores and "provide support" to out-of-work employees. Fast food chains are reacting similarly, as Yum Brands, comprising Pizza Hut and KFC, decided to temporarily pull the plug on locations in Russia. And in one of the most headline-making market shockwaves, McDonald's made a big move with its Russian restaurants, opting to shutter its 847 operating stores in the country.
While many McDonald's locations rely on franchise owners to run day-to-day operations, the company runs and oversees an overwhelming majority of the McDonald's locations in Russia. The decision to close these restaurants affects about 62,000 employees, all of whom will continue to receive wages from the company amid the massive layoff, per Insider. Closing so many restaurants — and supporting the unemployed former workforce — has major cost implications for McDonald's.
McDonald's expects to lose $50 million each month
According to Insider, McDonald's expects to lose $50 million each month as a result of its Russian closures. The business that the restaurant pulls in from Russia and Ukraine accounts for 9% of its overall income. While sales are paused, the chain will continue spending money to pay Russian staff, the leases on the buildings, and "supply chain costs and other expenses," per CNBC. Eventually, McDonald's plans to reopen in the country, but it hasn't offered a timeline as of yet.
As companies continue leaving Russia, the government responded by drafting a plan that would allow the country "to take temporary control of departing companies where foreign ownership exceeds 25%," reports Bloomberg. In the meantime, some Russian diners have panicked over the pullout. One user over on Reddit decided to make a final stop at their favorite fast food chain and filled up an entire fridge with McDonald's burgers.