McDonald’s is set to abandon business in Kazakhstan following supply chain disruption triggered by the Ukraine crisis.
Its exit highlights the supply issues faced by many of the country’s businesses in the wake of Russia’s invasion of Ukraine and Western sanctions on Moscow, Bloomberg News reported.
In November, the company was forced to temporarily close its 24 Kazakhstan restaurants – owned by TOO Food Solutions KZ - after cutting ties with Russian meat suppliers.
Faced with higher prices and freight costs to transport supplies, the Kazakhstan arm of the business was left unable to source a viable alternative to Russian-produced meat patties, faced with the threat of operating at a loss.
The fast-food chain exited Russia in May, notably banning its local franchises from producing meat patties from Russian suppliers.
Originally entering the Soviet Union in 1990, McDonald’s debut opened up the economy and marked a pivot towards capitalism. At its height, it ran 853 restaurants in the region.
Russia is Kazakhstan’s main trading partner, with the nation experiencing widespread supply chain issues following the invasion of Ukraine. In May 2022, Russia was responsible for roughly 40 per cent of Kazakhstan’s imports.
Following Russia’s invasion of Ukraine, Kazakhstan, like other countries, has been experiencing high levels of inflation. It reached 19.6 per cent in November 2022, primarily driven by a 24.1 per cent increase in food prices, worsened by the food industry’s dependence on imports.
McDonald’s presence in Kazakhstan is further complicated by its owner, Kairat Boranbayev, who was detained in March 2022 on embezzlement charges.
Boranbayev originally brought the corporation to Kazakhstan in 2016, later taking ownership of the franchise in Belarus before it lost its license in 2022 over supply issues.
McDonald’s has declined to comment.
