McDonald's closing all Russian locations, signaling rebirth of Cold War

McDonald’s announced Tuesday that it would temporarily close all 847 Russian locations under pressure from investors and consumers over the invasion of Ukraine.

The chain said it would continue to pay the salaries of its 62,000 employees as it keeps an eye on when and how it would be able to reopen its restaurants.

“Our values mean we cannot ignore the needless human suffering unfolding in Ukraine,” Chief Executive Chris Kempczinski said in a message to employees and other personnel.

McDonald’s owns and operates 84% of its Russian restaurants, with the rest run by franchisees, reports The Wall Street Journal. Both company and franchised locations would be shut down.

Reuters notes that McDonald’s operational positions is often copied by other companies due to its large size and global reach.

"If they decide to do something, then probably others will follow," said international franchise consultant William Edwards on whether other companies would pull out of Russia on moral grounds.

The suspension of operations is significant for McDonalds, which became a powerful symbol of the rise of capitalism over communism when its first location opened in Moscow in 1990, near the end of the Soviet Union.

Even before the collapse of the USSR, the classic 1984 action film Red Dawn used powerful imagery of Russian troops lined up with machine guns in front of a McDonald's to depict the Soviet invasion of the United States. 

McDonald’s also owns and operates 108 restaurants in Ukraine, employing nearly 10,000 people. Those locations have already been closed, and the company has worked to maintain payroll in the country, reports WSJ.

Russia and Ukraine accounted for around 9% of McDonald’s revenue last year given the high percentage of company owned restaurants, according to company filings. The countries accounted for 2% of sales across McDonald’s, and less than 3% of operating income, the chain said.