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Mcdonald’s says goodbye to Russia after 32 years

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Image Source: CNBC

In January of 1990, Mcdonald’s became the first restaurant to penetrate the Soviet Union. It was 4 in the morning back on the day of the opening, hundreds upon thousands of Russians had already lined up to get a taste of the Big Mac – one of McDonald’s oldest and finest creations.

Russians were hungry at the time, literally. “We are all hungry in this city,” said a woman after being asked why she lined up outside the fast-food chain store. “We need more of these places – there is nothing in our stores or restaurants,” she added.

The meal at McDonald’s had cost a lot, about half a day’s wage. Still, people lined up, saying it’s unusual but ‘delicious.’ Mcdonald’s then ended the day serving over 30,000 customers – a big feat for an American company inside the Soviet Union.

Now, 32 years after, the company has closed its doors to customers. The restaurant vacated its Russian stores after Vladimir Putin’s continued siege on its neighbor, affecting businesses and taking away the lives of Ukrainians.

McDonald’s announced the temporary closure of 800 of its stores in March, before its recent voluntary exit. Russians were quick to react and expressed sadness over the company’s decision. A Russian man even handcuffs himself outside a McDonald’s store, saying, “Closing down is an act of hostility against me and my fellow citizens!” The man was arrested after a while.

 

“To a generation of Russians, McDonald’s — commonly referred to as MakDak — was a fascinating phenomenon.”

Bakhti Nishanov, Eurasia specialist

 

Nishanov said that McDonald’s holds a great symbolic representation in the history of Russia. He recounts that the company’s entry to Russia, at the time still part of the Soviet Union, meant that the country was already fit for running a business, and it was open for more investments. “The company leaving Russia is an explicit signal that the country is no longer a place you want to be in as a business,” he said.

Not only does the company’s exit upset its symbolic representation, it has also practically laid off over 62,000 people across Russia. With other companies departing from Russia due to the conflicts, the number of jobs in the country has steadily dwindled.

The company announced earlier that it would sell its space of some 847 restaurants to interested clients. In a statement, McDonald’s management said to the press that the “humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald’s values.”

McDonald’s CEO Chris Kempczinski said that the decision was ‘extremely difficult’ on their part. He assured employees that they would still be paid until a buyer assumes the company’s assets in Russia.

In a report, McDonald’s revealed that the revenue losses from their exit amount to about $1.2 to $1.4 billion dollars. Combined with the chains in Ukraine, earnings would comprise about 9% of the total revenue in 2021.

“McDonald’s leaving Russia hits many of my generation differently,” he said, “I think because it represented — and I know this sounds dramatic —  hope and optimism. The company leaving confirms Putin’s Russia is a place devoid of those two things,” Nishanov concluded.

Based in LA, Alice Blake is a senior reporter for Kivo Daily. She primarily covers entrepreneurs.

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