Just days after announcing that it plans to sell its restaurants in Russia, McDonald’s on Thursday said it has a deal to sell its restaurants in the country to Alexander Govor, a licensee who has operated restaurants in Siberia since 2015.
The deal is subject to certain conditions, the company said, but closing is expected in the “coming weeks.”
According to terms of the agreement, Govor has agreed to retain McDonald’s workers in the market for at least two years, “on equivalent terms.” Govor has also agreed to fund the salaries of corporate employees who work in 45 regions in the country until closing and fund existing liabilities to suppliers, landlords and utilities.
Govor operates 25 McDonald's restaurants in Siberia.
The deal once complete will officially close the book on McDonald’s presence in Russia, once a symbol of Western expansion that has since become symbolic of a Western pullout of the country over its invasion of Ukraine. Russia invaded Ukraine in March, leading U.S. and European companies to exit the market in protest and under considerable pressure from advocacy groups.
McDonald’s initially closed its restaurants there, saying it was temporary. The company continued to pay its 60,000 workers there, however, leaving open the prospect that it could reopen the market, which McDonald’s opened in 1990 amid considerable fanfare and after decades of working to get it done.
“We entered Russia because of the hope and promise our brand came to signify,” CEO Chris Kempczinski told the system in a message on Monday. “For three decades, our presence in Russia inspired adages that went well beyond our food—from ‘burger diplomacy’ to a ‘McDonald’s peace theory’—and embodied the greater purpose and impact that brands like ours can have in the world.”
The decision to exit the market completely will not be cheap, costing the company up to $1.4 billion total. Yet the ongoing war and stories of Russia’s actions in Ukraine have proven too much. “It is impossible to ignore the humanitarian crisis caused by the war in Ukraine,” Kempczinski said. “And it is impossible to imagine the Golden Arches representing the same hope and promise that led us to enter the Russian market 32 years ago.”
Still, the move represents the first time McDonald’s has pulled back completely from a major global market—a rare setback for its international growth ambitions.
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