McDonald's pause in Russia marks "a new era of division," analyst says
McDonald's Corp said on March 8 it would temporarily close all 847 of its restaurants in Russia, increasing pressure on other global brands to pause operations in the country following Moscow's invasion of Ukraine.
The closure of the McDonald’s restaurants will also carry symbolic importance in Russia, where the first location to open, in central Moscow in 1990, became an iconic symbol of flourishing American capitalism as the Soviet Union fell.
"When McDonald's moved into the Soviet Union, it was part of a message of opening up and building trust and cooperation between Russia and the West. And now those avenues have all been closed off. And so Russia's having McDonald's exit that market really brings a bookend or close to that era. And we're kind of standing in, symbolically at least, a new era of division between Russia and much of the rest of the world," said Paul Musgrave, assistant professor of political science at the University of Massachusetts Amherst.
McDonald's said it would continue to pay salaries to its 62,000 employees in Russia. Because of its large size and global reach, the chain is often copied by other companies if it takes a stance on an issue or makes a major operational change.
" I think there is going to be a little bit of a noticeable hit to McDonald's bottom line. In their 2020 annual report, they had $500 million of assets denominated in rubles that they had to look out for. International business accounts for more than half of McDonald's corporate revenue. Russia is a smaller part of that, but it is a real part of it. So there is a real hit, " Musgrave said.
Coca-Cola Co and PepsiCo Inc also said on Tuesday they are suspending sales of their sodas in Russia.
Russia calls its actions in Ukraine a "special operation."