McDonald’s era in Russia coming to a close as restaurants sold

19 May 2022, 17:24

The oldest of Moscow’s McDonald’s outlets
Russia Ukraine War McDonalds. Picture: PA

Existing McDonald’s licensee Alexander Govor has agreed to buy the US firm’s 850 Russian restaurants and operate them under a new name.

McDonald’s is selling all of its restaurants in Russia 30 years after the burger chain became a powerful symbol of easing Cold War tensions between the United States and the Soviet Union.

The company shuttered hundreds of locations in March after Russia invaded Ukraine, which has cost McDonald’s about 55 million dollars (£44 million) per month.

On Monday, McDonald’s announced it would sell those stores and leave Russia.

An existing McDonald’s licensee, Alexander Govor, who operates 25 restaurants in Siberia, has agreed to buy McDonald’s 850 Russian restaurants and operate them under a new name, the Chicago burger giant said on Thursday.

Hundreds of Soviets and almost as many correspondents crowded around the first McDonald’s in the Soviet Union on its opening day in Moscow on January 31 1990
Hundreds of Soviets and almost as many correspondents crowded around the first McDonald’s in the Soviet Union on its opening day in Moscow on January 31 1990 (Rudi Blaha/AP)

McDonald’s did not disclose the terms of the sale.

Last year, McDonald’s Russian operations contributed 9% of the company’s total annual sales, or around two billion dollars (£1.6 billion).

McDonald’s was among the first western consumer brands to enter Russia in 1990.

Its large, gleaming store near Pushkin Square in Moscow, which opened shortly after the fall of the Berlin Wall, signalled a new era of optimism in the wake of the Cold War.

It is the first time the company has “de-arched”, or exited a major market.

It plans to start removing golden arches and other symbols and signs with the company’s name.

McDonald’s said it will also maintain its trademarks in Russia and take steps to enforce them if necessary.

The sale announced on Thursday is subject to regulatory approval, but is expected to close within a few weeks, McDonald’s said.

Young Muscovites check out a new taste sensation for the Soviet Union, hamburgers and soft drinks, in Moscow on January 31 1990
Young Muscovites enjoy burgers and soft drinks in Moscow on January 31 1990 (Rudi Blaha/AP)

Mr Govor, a licensee since 2015, has agreed to retain McDonald’s 62,000 Russian employees for at least two years on equivalent terms.

He also agreed to pay the salaries of McDonald’s corporate employees until the sale closes.

Mr Govor is half-owner of Neftekhimservis, a construction investor that owns an oil refinery in Siberia.

He is also on the board of directors of Inrusinvest, whose projects include a medical centre and a Park Inn hotel in the Siberian city of Novokuznetsk.

It is unclear if other US chains will follow McDonald’s lead and leave Russia.

McDonald’s owned 84% of its Russian stores, which gave it more control over operations than many of its rivals whose stores are owned by franchisees.

Starbucks’ 130 Russian stores have been closed since early March.

Its franchisee in the country, Kuwait-based Alshaya Group, is continuing to pay its 2,000 Russian employees.

Papa John’s suspended corporate operations in Russia and is no longer accepting royalty payments from its 185 stores there.

But the stores, which are owned by Colorado-based entrepreneur Christopher Wynne, remain open.

A message was left on Thursday with one of Mr Wynne’s companies.

McDonald’s left open the possibility that it could one day return to Russia.

“It’s impossible to predict what the future may hold, but I choose to end my message with the same spirit that brought McDonald’s to Russia in the first place: hope,” chief executive Chris Kempczinski wrote in a letter to employees.

“Thus, let us not end by saying, ‘goodbye.’ Instead, let us say as they do in Russian: Until we meet again.”

By Press Association

Latest World News

See more Latest World News

Police say that the suspect, 22, had mental health problems

Man charged with murder over Copenhagen shooting

Spanish military jets diverted the Menorca-bound easyJet flight for security checks.

Dramatic moment easyJet flight intercepted by fighter jets over 'hoax bomb threat'

Jake McLean (centre) was reportedly killed in the crash, whilst Yazmin Oukhellou (insert) was injured

Lauren Goodger's ex Jake McLean dies in car crash with TOWIE star Yazmin Oukhellou injured

A piece of glacier broke away on the Marmolada mountain

Six dead after chunk of glacier breaks off and slams into hikers on Italian mountain

Several people have been killed in a shooting in a Copenhagen shopping centre

Chilling video shows suspected Copenhagen gunman brandishing rifle before 3 were killed

Residents in a number of Sydney suburbs were ordered to evacuate

Thousands flee their homes as flooding hits Sydney

A woman died after losing an arm and a leg in a shark attack off the coast of Hurghada, Egypt

Second woman killed by shark off Egypt's red sea coast

Oscar Pistorius has met with the father of Reeva Steenkamp

Oscar Pistorius meets victim Reeva Steenkamp's father in a bid for parole

North Korea has blamed its Covid outbreak on 'alien things' and balloons coming from South Korea.

North Korea blames Covid outbreak on 'alien things' and balloons from South

Boris Johnson said Putin does not have to give up power for there to be peace in Ukraine

Putin's made more than 30 nuke threats during Ukraine invasion, Boris tells LBC

Russian President Vladimir Putin has hit back at western leaders for their lack of "machismo" and said it would be ‘disgusting’ to see Boris Johnson topless.

Putin mocks G7 leaders' lack of 'machismo' and says PM would look 'disgusting' topless

Ukraine has retaken Snake Island after Moscow's troops abandoned the strategic outpost in what Russia's Defence Ministry has described as a 'goodwill gesture'.

'Kaboom!' Ukraine celebrates Putin's humiliation as Russia retreats from Snake Island

President Joe Biden listens as Judge Ketanji Brown Jackson speaks

Ketanji Brown Jackson to be sworn in as US Supreme Court justice

An investigator works outside the Bataclan concert hall (Christophe Ena/PA)

Life without parole for surviving extremist who carried out Paris attacks

A shark is seen swimming across a sand bar (Phil Marcelo/AP)

Great white sharks head to Cape Cod as busy tourist season gets under way

Police outside the Bataclan concert hall in Paris (Catherine Wylie/PA)

Men convicted of involvement in 2015 terror attacks in Paris