A huge number of American companies have announced that they are ceasing their operations in Russia in recent weeks, in response to the invasion of Ukraine. The likes of Apple, Nike and Google all announced in early March that they were limiting their service in Russia.
More:
On 8 March, McDonald’s become the first major American fast food chain to suspend activities in Russia. Company CEO Chris Kempczinski released a statement saying: “Our values mean we cannot ignore the needless human suffering unfolding in Ukraine.”
They were followed by Starbucks, Papa John’s, Burger King and Yum Brands, the company that owns KFC, Taco Bell and Pizza Hut, in announcing their own decisions to withdraw from the Russian market.
— The Kyiv Independent (@KyivIndependent) March 9, 2022⚡️KFC, Pizza Hut suspend operations in Russia.
Yum Brands Inc, the parent company of the two fast food chains, said on March 8 it was pausing investment in Russia and halting operations at its restaurants.
Yum has at least 1,000 KFC and 50 Pizza Hut locations in Russia.
How many American fast food restaurants are in Russia?
In most cases American fast food brands that operate in Russia do so on a franchise basis, meaning that the company does not actually own and control the individual stores. Franchise owners simply license the company name, image and products in return for a percentage of the profits, under the condition that they stick to certain rules set out by the company.
The likes of Starbucks, Papa John’s and Yum Brands all follow this model, allowing them to expand into new markets without assuming any unnecessary risk.
The only brand that deviates from this structure in Russia is McDonald’s, which owns the vast majority of its 847 restaurants in the country.
KFC is the most prolific American fast food brand in Russia with over around 1,000 premises across the country. That is followed by McDonalds with close to 847, and Burger King, which operates roughly 800 restaurants in Russia.
There are also 130 Starbucks coffee shops and 50 Pizza Hut restaurants in Russia.
A man in Russia today, pianist Nikas Safronov, chains himself to a McDonald’s and screams, “They don’t have the right to close down!” before he’s carted off by the police. Someone in the crowd yells back, “In six weeks, they’ll reopen under another name!” pic.twitter.com/FhAwronpiS
— Kevin Rothrock (@KevinRothrock) March 13, 2022
When did American fast food chains first arrive in Russia?
For decades the Russian market was entirely off-limits for American companies due to the isolationism of Moscow during the Soviet era. However after the Berlin Wall fell fast food restaurants become one of the first entrants into the new market, taking advantage of a consumer base starved of Western products for generations.
The first McDonald’s restaurant opened in Moscow’s Pushkin Square in 1990 and reports from the time claim that 30,000 people queued to try the famous burgers for the first time.
Expansion into Russia became something of a status symbol for fast food brands looking to spread their products into a new and rapidly-growing market. When Pizza Hut expanded into Russia it produced a commercial for their restaurants using Mikhail Gorbachev, the last leader of the Soviet Union.
The growth of American fast food brands in Russia over the past three decades has been rapid, tip-toeing through a number of political and diplomatic disputes to reach the point where Russia now accounts for 9% of the company’s entire annual revenue. The decision to cease operations there will reportedly cost McDonald’s around $50 million every month.
