McDonald’s, Starbucks and Coca-Cola leave Russia

CNN, CNNBUSINESS

By Danielle Wiener-Bronner, CNN Business

McDonald’s and Starbucks are closing their restaurants and cafes in Russia, and Coca-Cola is suspending operations there in response to the Russian invasion of Ukraine. PepsiCo is also pulling some products out of the country.

“McDonald’s has decided to temporarily close all of our restaurants in Russia and suspend all market operations,” CEO Chris Kempczinski said in a statement on Tuesday.

There were 847 McDonald’s locations in Russia at the end of last year, according to an investor document.

Worldwide, most McDonald’s locations are operated by franchisees. But this is not the case in Russia, where 84% of sites are operated by the company, according to the document. Russian restaurants, along with 108 others in Ukraine, all operated by McDonald’s, accounted for 9% of the company’s revenue in 2021, according to the document.

“In Russia, we employ 62,000 people who have given heart and soul to our McDonald’s brand to serve their communities. We work with hundreds of local Russian suppliers and partners who produce our menu foods and support our brand,” Kempczinski said. “And we serve millions of Russian customers every day who rely on McDonald’s. In the more than thirty years that McDonald’s has operated in Russia, we have become an essential part of the 850 communities in which we operate.

But, he added, “at the same time, our values ​​mean that we cannot ignore the unnecessary human suffering taking place in Ukraine.”

Starbucks

In a message to employees on Tuesday, Starbucks CEO Kevin Johnson said that “today we have made the decision to suspend all business activity in Russia.”

He added that “our licensed partner has agreed to suspend store operations immediately and will provide support to the nearly 2,000 [employees] in Russia who depend on Starbucks for their livelihood.

Johnson added that Starbucks was suspending shipping of all Starbucks products to Russia. “We condemn the horrific attacks on Ukraine by Russia and our hearts go out to all those affected,” he said.

Coke

Coca-Cola also said on Tuesday that it was “suspending operations in Russia.”

The company said “our hearts go out to those who are experiencing the unconscionable effects of these tragic events in Ukraine”, adding that it will monitor the situation as things change.

PepsiCo, Danone and Unilever

On Tuesday, PepsiCo CEO Ramon Laguarta explained how PepsiCo is approaching the situation.

“In light of the horrific events in Ukraine, we are announcing the suspension of the sale of Pepsi-Cola and our global beverage brands in Russia, including 7Up and Mirinda.” Laguarta added that Pepsi was suspending its capital investments, advertising and promotional activities in Russia.

But PepsiCo will continue to sell some of its products, including infant formula, baby food, milk and other dairy products.

“We have a responsibility to continue to offer our other products in Russia, including basic necessities,” Laguarta said. “As we continue to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and the uncertainty that awaits them,” he added.

Farryl Bertmann, a registered dietitian and lecturer in the Department of Nutrition and Food Science at the University of Vermont, warned that if big food companies leave Russia entirely, the citizen population could suffer, even if they have other food sources.

“I believe people should be able to buy a variety of foods at different prices,” she said. “It can only be done successfully if the access is there.”

She said that “ultimately food has to be made available”, adding: “I would be very concerned if the food environment [were] drastically change.

Other companies have taken a similar approach to Pepsi.

Danone, which makes Silk milk alternatives, Activia, Oikos yogurts, infant formula and more, said in a LinkedIn post on Sunday that “we have decided to suspend all investment projects in Russia,” adding that this “would maintain our production and distribution of fresh dairy products and infant nutrition, to still meet the essential food needs of the local population.

Unilever made a similar statement this week, saying “we will continue to provide our everyday essential food and hygiene products made in Russia to people across the country”, adding “we will monitor this closely”.

The company said it had suspended imports of its products to Russia and was stopping all investment in the country, in addition to stopping exports from there. He said he would not take advantage of his presence in Russia.

Facing the pressure

The announcements followed pressure from critics who called on the companies to leave Russia. Several Western companies in several sectors have halted their activities in Russia after the country’s attack on Ukraine, but some restaurants continue to sell their products in the country.

For some restaurant chains, this may be because the establishments are operated by franchisees, giving business owners less control.

Yum Brands, owner of KFC, Pizza Hut, Taco Bell and Habit Grill, said in a statement that it had “suspended all investment and restaurant development in Russia.”

The company added that it will “redirect all profits from operations in Russia to humanitarian efforts,” in addition to donating to the Red Cross through the Yum Brands Foundation.

The company also said it was “suspending operations of KFC-owned restaurants in Russia and finalizing an agreement to suspend all operations of Pizza Hut restaurants in Russia, in partnership with its master franchisee.”

“This action builds on our decision to suspend all investment and restaurant development in Russia and to redirect all profits from operations in Russia to humanitarian efforts,” the company said in a press release.

Yum has around 1,000 KFC restaurants and 50 Pizza Hut locations in Russia. The company said most of them are operated by independent owners.

On Twitter, people have used boycott hashtags to target companies like McDonald’s and PepsiCo which until now have been silent on their plans for Russia.

McDonald’s, PepsiCo and other companies were called by New York State Comptroller Thomas DiNapoli.

Before McDonald’s made its announcement, DiNapoli emailed a number of companies represented in the New York State Joint Retirement Fund, including PepsiCo and McDonald’s, urging them to stop doing business with them. Russia.

“Companies like McDonald’s and PepsiCo, which have a large footprint in Russia, need to consider whether doing business in Russia is worth the risk during this extraordinarily volatile time,” DiNaPoli said in a statement.

– CNN’s Robert North contributed to this report.

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