The pull-out of iconic western brands from Russia is gathering momentum, with Starbucks, Coca-Cola and Pepsi joining McDonald’s in pausing operations in response to Russia’s invasion of Ukraine.
Late on Tuesday, PepsiCo, the soft-drink and snack maker, said it was suspending all advertising in Russia and stopping the sale of its drinks brands, after a similar announcement by its rival Coca-Cola.
Fast-food giant McDonald’s said earlier that it will temporarily suspend operations at its 850 locations.
The Chicago-based company, which owns 84% of its stores in Russia, could take a big financial hit because of the closures. In a recent regulatory filing, McDonald’s said its restaurants in Russia and Ukraine contributed 9% of its annual revenue, or around $2bn.
The company – which opened its first Russian branch in Pushkin Square in Moscow on 31 January 1990, when an estimated 38,000 Soviets lined up for hours to taste the Big Mac, a symbol of American capitalism – said it will continue to pay its 62,000 Russia-based employees.
In a message to staff and franchisees, Chris Kempczinski, the chief executive of McDonald’s, said the situation was “extraordinarily challenging for a global brand like ours”, which he said worked with hundreds of local suppliers and partners producing its food. “We understand the impact this will have on our Russian colleagues and partners,” he said.
“The conflict in Ukraine and the humanitarian crisis in Europe has caused unspeakable suffering to innocent people. As a system, we join the world in condemning aggression and violence and praying for peace,” Kempckinski added.
Starbucks, too, said it is suspending all business activity in Russia, including shipment of its products and cafes run by a licensee.
The company said that Kuwait-based Alshaya Group, which operates at least 100 Starbucks cafes, would still support its nearly 2,000 staff in Russia “who depend on Starbucks for their livelihood”.
McDonald’s and other western food and drink companies have faced calls to pull out of Russia after the invasion of Ukraine.
Coca-Cola Co later said it was suspending its business in Russia. Pepsi also followed suit, saying the sale of its brands, capital investments and all advertising would be suspended in Russia and it would support “our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain”. It said it would continue to sell daily essentials, such as milk and other dairy offerings, baby formula and baby food, in Russia.
Ukraine’s foreign minister, Dmytro Kuleba, told CNN two days ago that “all western companies must withdraw from Russia” on humanitarian grounds. “We were upset to hear companies like Coca-Cola and McDonald’s remain in Russia and continue providing their products,” he said.
McDonald’s said it could not predict when it may be able to reopen its restaurants in Russia and would “continue to assess the situation and determine if any additional measures are required”. It said it would “closely monitor the humanitarian situation” as well as disruption to its supply chain.
McDonald’s is also paying full salaries to its Ukrainian employees and has donated $5m (£3.8m) to an assistance fund for employees as well as supporting relief efforts led by the International Red Cross.
The McDonald’s shutdown comes after a host of other consumer brands including Netflix, Levi’s, Burberry, Ikea and Unilever, the owner of Marmite and Ben & Jerry’s, announced they had halted business in the country.
Leading professional services firms including KPMG, PwC, EY and Deloitte have also cut off businesses in Russia and Belarus.
Companies around the world have been scrambling to assess their links with Russia after the US, EU and UK sought to isolate it economically with sanctions.
Sanctions have also made it illegal for US, EU or UK companies to serve some of the biggest Russian businesses, including banks such as Sberbank, Gazprombank and VTB.
