McDonald's name to disappear from Russia



McDonald's is selling its Russian business-- that includes 850 restaurants that employ 62,000 people-- to existing licensee Alexander Govor, the fast-food chain revealed Thursday.The deal comes days after McDonald's stated it would leave Russia due to its intrusion of Ukraine in February. Govor is acquiring all of the company's dining establishments in Russia and will operate them under a different name. Terms of the offer, which is expected to close in a couple of weeks, were not disclosed.

The Chicago-based business announced in early March that it was briefly closing its stores in Russia however would continue to pay workers. On Monday, it stated it would look  to have a Russian purchaser employ those employees and pay them till the sale closes. It didn't identify a prospective buyer.

CEO Chris Kempczinski stated the "devotion and loyalty to McDonald's" of staff members and hundreds of Russian suppliers made it a hard choice to leave.

" However, we have a commitment to our global community and need to remain steadfast in our values," Kempczinski stated in a declaration, "and our dedication to our worths means that we can no longer keep the arches shining there."

As it tries to sell its restaurants, McDonald's said it plans to begin removing golden arches and other symbols and signs with the business's name. It said it will keep its trademarks in Russia.

" This was the absolute best of a series of tough choices," James O'Rourke, teacher of management at the University of Notre Dame's Mendoza College of Business, said in an e-mail. "Under this plan, McDonald's Russian staff members will have a consistent employment future, ordinary citizens will have a mostly familiar place for a sandwich and a soda, and by 'de-arching' the 850 stores in Russia McDonald's Corporation will protect the brand and recover a minimum of some of its capital investment.".

The very first McDonald's in Russia opened in the middle of Moscow more than three years earlier, shortly after the fall of the Berlin Wall. It was an effective sign of the easing of Cold War stress in between the United States and Soviet Union.McDonald's was the very first American junk food restaurant to open in the Soviet Union, which would collapse in 1991.

McDonald's decision to leave comes as other American food and beverage giants consisting of Coca-Cola, Pepsi and Starbucks have actually paused or closed operations in Russia in the face of Western sanctions.

Corporations from British energy giants Shell and BP to French carmaker Renault have pulled out of Russia, taking a hit to their bottom lines as they look to sell their holdings there. Other companies have remained at least partly, with some dealing with blowback.

On Monday, Renault gave its Russian assets to the Kremlin, both parties revealed, "marking the first significant nationalization since the start of sanctions over Moscow's military campaign in Ukraine," Agence France-Presse said.

McDonald's said it anticipates to record a charge against profits of between $1.2 billion and $1.4 billion over leaving Russia.Its restaurants in Ukraine are closed, but the business stated it is continuing to pay complete incomes for its employees there.

McDonald's has more than 39,000 locations throughout more than 100 nations. The majority are owned by franchisees - just about 5% are owned and operated by the business.

McDonald's said exiting Russia will not change its forecast of including a net 1,300 restaurants this year, which will contribute about 1.5% to companywide sales growth.Last month, McDonald's reported that it earned $1.1 billion in the first quarter, down from more than $1.5 billion a year previously. Revenue was nearly $5.7 billion.

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