Burger King’s Russian partner refuses to close its 800 stores
Burger King's partner in Russia is not being cooperative.
Burger King is moving to divest its 15% minority stake in its Russian business, but it can’t so right away based on the terms of its existing joint partnership.
The burger chain, part of Restaurant Brands International, has no corporate restaurants in Russia. It entered the Russian market 10 years ago through a joint partnership with three partners: restaurant businessman Alexander Kolobov, Investment Capital Ukraine and VTB Capital. Kolobov is responsible for the day-to-day operations and oversight of the 800 Burger King restaurants in Russia. Last week, Burger King said it had suspended all of its corporate support for the Russian market, including operations, marketing and supply chain and would also refuse approvals for any investment or expansion.
On Thursday, in an open letter to employees, Restaurant Brands International president David Shear said that the company contacted Kolobov and demanded the suspension of Burger King restaurant operations in Russia. “He has refused to do so,” Shear wrote.
Burger King has started the process to dispose of its 15% ownership stake in the joint venture. But it will take some time, according to Shear.
“There are no legal clauses that allow us to unilaterally change the contract or allow any one of the partners to simply walk away or overturn the entire agreement,” he wrote. “No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses.”
Burger King said it has committed to redirecting any profits it receives from the business, including its ownership stake, to the United Nations’ refugee agency (UNHCR) and made an immediate donation of $1 million toward that commitment.
“Would we like to suspend all Burger King operations immediately in Russia? “Yes,” Shear wrote. “Are we able to enforce a suspension of operations today? No. But we want to be transparent with our actions and explain the steps we have taken to stand with the international business community in response to Russia’s attack on Ukraine and its people.”
[Read More: McDonald’s reveals cost of Russian closures; other brands follow its lead to pause]