Fast food giant McDonald's and French auto maker Renault are leaving Russia and its lucrative market because of an unpredictable operating environment. McDonald's has been in Russia since the collapse of the Soviet Union, and has hundreds of outlets and employs thousands, but it has joined many other Western companies exiting the Russian market because of the international sanctions following the invasion of Ukraine.
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, the Chicago-based company said. McDonald's had already announced the temporary closure of some 850 restaurants in Russia last March.
But this week's announcement draws the curtain on the company's activities in Russia for good, after more than 30 years of operation. The company said it was looking for a Russian buyer to hire its 62,000 employees and pay them until the sale is finalized. It has yet to identify a potential buyer.
The French automaker announced the sale of all of its activities in Russia to local authorities, a decision which deprives it of its second market in terms of volumes. However the contract leaves a door open for a potential return, via a buyout option valid for six years.
The French group has sold 100% of the shares of Renault Russia to the city of Moscow, while its 67.69% stake in the Russian manufacturer Avtovaz has been transferred to NAMI, an automotive research institute which depends on the Russian Ministry of Energy.
Renault has not communicated any amount related to these operations. The completion of these transactions is not subject to any conditions, and all required authorizations have been obtained,” Renault added.
McDonald's opened its first restaurant in Russia in the middle of Moscow over three decades ago, soon after the fall of the Berlin Wall. Many at the time saw this as a symbol of the melting Cold War tensions between the US and the Soviet Union.
In a statement, McDonald's CEO Chris Kempczinski addressed the difficulty the company faced when making the decision to leave, saying that McDonald's felt a dedication and loyalty to the tens of thousands of employees and hundreds of Russian suppliers.
However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the arches shining there, he said.
The global fast-food chain's unmistakable arches” (two in yellow combining to make an M shape), which have long served as the restaurant's trademark brand, will no longer be available for use after the sale, alongside the McDonald's name, logo or menu.
Yet one company in Russia is trying to keep that logo, only with a small change. A company calling itself Uncle Vanya, after the Chekov play, is trying to trademark the McDonald's arches turned on their side to create what looks like a B in the Roman alphabet but represents a V sound in Russian, to symbolize the name Uncle Vanya. The company is thought to be a likely candidate to seek to purchase some or all McDonald's facilities in Russia.
For Renault it means giving up its second market in terms of volumes, behind France, with more than 480,000 vehicles sold in 2021. In terms of revenue, Russia represented a turnover of 4.55 billion Euros, or 9.9% of the consolidated total.
“Today, we have made a difficult but necessary decision; and we are making a responsible choice towards our 45,000 employees in Russia, while preserving the group’s performance and our ability to return to the country in the future, in a different context,” Renault chief executive Luca de Meo said in the statement.