McDonald’s, PepsiCo, Coca-Cola and Starbucks are all closing operations in Russia as a new iron curtain falls between Moscow and the West.
The news comes as Russia has suspended the sale of foreign currencies until September, which means citizens will not be able to buy them at local banks. However, they will be able to exchange foreign currencies in the local ruble unit.
Pepsico, another poster boy for capitalism that introduced cola to the Soviet Union, is suspending sales of its soft drinks alongside competitor Coca-Cola.
However, PepsiCo said it had a humanitarian responsibility to offer other products, including basic necessities such as milk and baby formula.
It comes after Britain, the United States and the European Union laid out plans to ditch Russian oil and gas in a move that President Joe Biden said was aimed at “targeting the main artery of the Russian economy.
Mr. Biden added: Americans have come together in support of the Ukrainian people and made it clear that we will not be involved in funding Putin’s war.”
McDonald’s opened its first restaurant in Moscow in 1990, drawing queues of around 30,000 to Pushkin Square in what became a defining moment for the triumph of post-Cold War capitalism.
The company’s success gave rise to Thomas Friedman’s Golden Arches theory, in which he suggested that consumerism was a force for peace because neither of the two countries that both owned the chain’s restaurants was never at war.
Chris Kempczinski, the chief executive of McDonald’s, wrote to employees to say the company was facing an “extraordinarily difficult” situation.
McDonald’s employs 62,000 people in Russia, works with hundreds of local suppliers and serves millions of customers every day. Around 9% of the company’s revenue comes from Russia and Ukraine, or around $2bn (£1.5bn).
However, Mr Kempczinski said it was about “doing the right thing”, and so McDonald’s was suspending all operations in Russia.
He said: “The conflict in Ukraine and the humanitarian crisis in Europe have caused untold suffering to innocent people… We join the world in condemning aggression and violence and praying for peace.
Clive Black, director of Shore Capital, said the shutdown would likely bring back the impact of sanctions on ordinary Russians.
He said: “It’s one thing when there are outside things happening around banking and oil, but it’s another when 850 restaurants are closing. It’s a very clear symbol that something change, which is quite material.
“In isolation it wouldn’t necessarily be the end of the world, but we saw how popular McDonald’s was in the UK when the Covid controls ended, and I imagine it was the same in Russia.
“It’s a very big statement, and along with everything else, it will increase the pressure [among the public] that what is happening is not normal and perhaps the narrative needs to be challenged.”
McDonald’s said it would continue to pay all of its employees in Russia, despite the restaurant closures.
It’s impossible to predict when they will reopen, the company said. He will assess the situation to decide if further action is necessary.
Starbucks, which has 130 stores operated by licensed partner Alshaya Group, said it would “still provide support to nearly 2,000 partners in Russia who depend on Starbucks for their livelihoods.”
The step follows a growing public backlash against the brands, with weekend shoppers pledging to boycott McDonald’s if it continues to sell in Russia.
More about this article: Read More
This notice was published: 2022-03-08 22:24:07