McDonald’s finds buyer for Russian business
McDonald’s Corp. is wasting no time in its effort to exit the Russian market.
Following its May 16 announcement that it would exit the Russian market and had initiated a process to sell its Russian business, McDonald's Corp. has entered into a sale and purchase agreement with existing Russian licensee Alexander Govor.
Under this agreement, Govor will acquire McDonald's entire Russian restaurant portfolio, which includes 850 restaurants, and operate the locations under a new brand. Since 2015, Govor has served as a McDonald's licensee and has operated 25 restaurants in Siberia.
The sale and purchase agreement provides for employees to be retained for at least two years, on equivalent terms. Govor has also agreed to fund the salaries of corporate employees who work in 45 regions of the country until closing, as well as fund existing liabilities to suppliers, landlords and utilities.
McDonald’s exits Russia amid Ukraine conflict
This move follows McDonald’s decision in early March 2022 to temporarily close its restaurants in Russia and pause operations in the market in response to the country’s invasion of Ukraine. As a result of its exit from Russia, McDonald’s expects to record a write-off of $1.2 billion to $1.4 billion and “recognize significant foreign currency translation losses previously recorded in shareholders' equity. The fast-food giant opened its first restaurant in Russia in 1990, in Moscow.
“The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald's to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald's values,” McDonald’s said in a statement when it first announced its plans to sell off its Russian business.
At that time, McDonald’s said it wanted to sell its entire portfolio of restaurants in Russia to a local buyer. To prep for the sale, the company said it would be "de-Arching" its Russian locations, which entails no longer using the McDonald's name, logo, branding and menu. The company said it will keep its trademarks in Russia.
McDonald’s has some 62,000 employees in Russia. The company said when the plan to sell its Russian business was initially announced that its priorities include seeking to ensure those workers continue to be paid until the close of any transaction, and that employees have future employment with any potential buyer.
McDonald's restaurants in Ukraine remain closed while the company continues to pay full salaries for its employees in the country and continues to support local relief efforts led by Ronald McDonald House Charities. Across Europe, the McDonald's System is supporting Ukrainian refugees through food donations, housing and employment.
The agreement to sell McDonald’s Russian operations to Govor remains subject to certain conditions, including regulatory approval, with closing expected to occur in the coming weeks.
Headquartered in Oak Brook, Ill., McDonald's operates more than 39,000 locations in over 100 countries. Approximately 95% of McDonald's restaurants worldwide are owned and operated by independent local business owners.