McDonald's Announcement About Closing Stores in Russia
McDonald’s and other companies have taken bold steps by closing stores in Russia while the invasion of Ukraine continues. In an email to employees, CEO Chris Kempczinski describes ongoing support to employees in Ukraine, pride in building Russian locations, and the decision to close those locations:
“…our values mean we cannot ignore the needless human suffering unfolding in Ukraine. Years ago, when confronted with his own difficult decision, Fred Turner explained his approach quite simply: ‘Do the right thing.’ That philosophy is enshrined as one of our five guiding values, and there are countless examples over the years of McDonald’s Corporation living up to Fred’s simple ideal. Today, is also one of those days.”
Kempczinski explains that the company will continue to pay both Ukranian and Russian employees’ salaries. They also will keep the Ronald McDonald House Charities open to work with local hospitals.
My Googling led me to this bare-bones page, perhaps designed to reassure investors. Although 955 stores are in Russia and Ukraine, they represent only about 2% of systemwide sales and <3% of operating income. However, the revenue percentage is quite high at 9%. The document explains why: 84% of stores in Russia and 100% of stores in Ukraine are company operated, while the global average is only 7% (so 93% of all stores are franchised). Company-owned stores bring far more revenue to the company, which is one of the many reasons this was probably a difficult decision for the executive team.