McDonald's Corp. (MCD) said Monday that it will permanently exit the Russia market, ending more than three decades of operations in the former Soviet Union, as a result of the humanitarian crisis linked to the ongoing assault of Ukraine.
McDonald's, which suspended its operations in Russia on March 22, said it will sell its entire portfolio of restaurants to a local buyer, who will then be compelled to remove all of McDonald's name, logo, branding and menus in a process it has called "de-Arching" the nearly 850 locations.
The world's largest restaurant chain will take a non-cash hit of around $1.3 billion linked to the sale, the company said.
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"We have a long history of establishing deep, local roots wherever the Arches shine. We're exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees," said CEO Chris Kempczinski.
"Their dedication and loyalty to McDonald's make today's announcement extremely difficult. However, we have a commitment to our global community and must remain steadfast in our values," he added. "And our commitment to our values means that we can no longer keep the Arches shining there."
McDonald's shares were marked 0.35% lower in early afternoon trading Monday following news of the Russia exit to change hands at $244.20 each.
Last month, the group posted stronger-than-expected first quarter earnings as menu price hikes and solid global sales helped offset the impact of its suspension of business in Russia and higher food and labor costs.
McDonalds said diluted earnings for the three months ending in March were pegged at $2.28 per share, up 15.6% from the same period last year and firmly ahead of the Street consensus forecast. Group revenues, McDonalds said, rose 10.75% to $5.67 billion, just ahead of analysts' estimates of a $5.6 billion tally.
The world's biggest restaurant said same-store sales rose 11.8% for the period on a global basis, firmly ahead of Street forecasts, as Covid restrictions faded and restaurants re-opened, while U.S. sales jumped 3.5%.
