Starbucks, PepsiCo, Yum! Brands join McDonald's in Russian exodus
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Western food diplomacy was one of the first things that flourished in Russia after the Iron Curtain fell in 1989. In fact, the opening of the first McDonald's (NYSE:MCD) in Moscow's Pushkin Square the following year came to "symbolize the entire opening of the USSR to the West," according to Marc Carena, former managing director of the company's Russian operations. The fast food giant went on to plow millions of dollars into the country, eventually growing into a network of 850 restaurants and 62,000 employees.
Snapshot: Russia's invasion of Ukraine is threatening to upend three decades of investment in the country as pressure builds on corporations to respond to the conflict. Industries from oil to media have already severed or suspended their Russian operations, and the burden to act is now spreading to the food business. While the decision may be simple, the effects are quite complex, spreading across manufacturing and supply chains, investors and banks, as well as millions of industry workers.
The Golden Arches has become the latest company to temporarily close all its locations in Russia, and while it will continue to pay its employees in the interim, the firm said it was impossible to predict when stores might reopen. Russian operations only account for 3% of McDonald's (MCD) operating income, but make up 9% of its annual revenues. It also owns 84% of its restaurants in the country and is the largest taxpayer to Russia in the food industry.
Following in suit: Soon after the McDonald's (MCD) decision, other well-known food companies made similar announcements. Starbucks (NASDAQ:SBUX) said it would close all of its locations in Russia, while Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP) (which has even been there since the 1970s) said it was halting most sales there. Yum! Brands (NYSE:YUM) is also suspending operations at 70 company-owned KFCs and all 50 franchise-owned Pizza Huts in Russia, while consumer and food giant Unilever (NYSE:UL) has paused all imports and exports into and out of the country.