McDonald's says Russia store closures to cost $50 mln per month

By
A view shows a McDonald's restaurant in Moscow
A view shows a McDonald's restaurant in central Moscow, Russia March 9, 2022. REUTERS/Evgenia Novozhenina Purchase Licensing Rights, opens new tab
NEW YORK, March 9 (Reuters) - McDonald's Corp (MCD.N), opens new tab said on Wednesday that the temporary closure of its 847 stores in Russia will cost the fast-food chain about $50 million a month.
A cascade of major American brands, including Starbucks Corp (SBUX.O), opens new tab, PepsiCo Inc (PEP.O), opens new tab and Coca-Cola Co (KO.N), opens new tab, followed McDonald's on Tuesday in saying they would cease some or all business in Russia following Moscow's invasion of Ukraine. read more
McDonald's, an icon of the post-Soviet era, runs 84% of its Russian locations itself and said it will continue paying all of its 62,000 staff and restaurant employees there. Other costs will come from sites it leases and supply chain operations, Chief Financial Officer Kevin Ozan said during a UBS conference on Wednesday.
"This is a really challenging and complex situation for a global company like us," he said.
Seven other fast-food brands with more than 2,600 outlets combined in Russia could also take a financial hit from any decisions to pull out, even though nearly all of those restaurants are owned and operated by independent franchisees. read more
Papa John's International Inc said in a regulatory disclosure on Wednesday that it could end up having to absorb the cost of $15.2 million of receivables associated with its master franchisee in Russia, which runs all of its 188 restaurants there.
Royalties from the franchisee made up less than 1% of Papa Johns total revenue in 2021, the company said.
The pizza chain also said Wednesday that it ceased all operational, marketing and business support to - and engagement with - the Russian market, and that it is not receiving any royalties from restaurants there. Its Russia franchisee owns and operates its own supply chain.

Sign up here.

Reporting by Hilary Russ in New York and Praveen Paramasivam in Bengaluru; Editing by Saumyadeb Chakrabarty and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Purchase Licensing Rights

Thomson Reuters

Hilary Russ writes about global restaurant chains including McDonald's and Starbucks. She previously covered sports betting, as well as municipal bonds, public finance and infrastructure. Hilary previously worked at Law360 covering corporate bankruptcies, white collar crime and the U.S. Supreme Court. At The Cape Cod Times and City Limits, she covered local courts, general news and social and public policy issues. She is an avid bird watcher.

Read Next