Starbucks, PepsiCo, Yum! Brands join McDonald’s in Russian exodus

Food diplomacy was one of the first things to bloom in Russia following the fall of the Iron Curtain in 1989, and it has continued to this day. As a result, according to Marc Carena, former managing director of McDonald’s Russian operations, the company’s first restaurant, located in Moscow’s Pushkin Square the next year, “came to represent the whole opening of the Soviet Union to the West.” In the years that followed, the fast-food behemoth poured millions of dollars into the nation, ultimately expanding to 850 locations with 62,000 people.

The invasion of Ukraine by Russia threatens to upend three decades of investment in the nation as pressure mounts on firms to react to the war. In a nutshell: Industries ranging from oil to media have either curtailed or discontinued their activities in Russia, and the onus to act is now falling on the food industry. However, although the choice may be straightforward, the consequences will be far-reaching, affecting manufacturers and supply networks, investors and banks, and the millions of people employed in the sector.

The Golden Arches has become the latest business to temporarily shut all of its locations in Russia, and although the company would continue to pay its workers during this time, the company said that it was hard to determine when the shops will return in the future. Despite the fact that Russian operations generate just 3% of McDonald’s (MCD) operational profitability, they generate 9% of the company’s yearly sales. In addition, it controls 84 percent of its restaurants in the nation and is the biggest taxpayer to the Russian government in the food and beverage business.

Following in the footsteps of McDonald’s (MCD), several well-known food firms made similar statements shortly after the McDonald’s decision. Starbucks (NASDAQ: SBUX) said that it will shut all of its shops in Russia, while Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP), which has had a presence in the country since the 1970s, announced that they would suspend the majority of their sales in the country. Additionally, Yum! Brands (NYSE: YUM) has halted operations at 70 company-owned KFC restaurants and all 50 franchisee-owned Pizza Hut restaurants in Russia, while consumer and food major Unilever (NYSE: UL) has put a halt to all imports and exports into and out of the country.


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