For McDonald’s, Starbucks, Pepsi and Others, Business as Usual in Russia
Update: 3:20 p.m., Tuesday, March 8
Pepsi, Coca-Cola, and Starbucks all said Tuesday that they are suspending business in Russia after Putin’s invasion of Ukraine.
“Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine,” Coke said in a statement. “We will continue to monitor and assess the situation as circumstances evolve.”
Pepsi said that while it was pausing sales of its soft drink brands, it would keep selling essential products such as baby formula, milk, and baby food, CNBC reported.
Update: 10:34 a.m., Tuesday, March 8
McDonald’s said Tuesday it is temporarily closing all of its 850 restaurants in Russia in response to the country’s invasion of Ukraine, the Associated Press reported.
The company said it will keep paying its 62,000 employees in Russia. But in an open letter to employees, McDonald’s President and CEO Chris Kempckinski said closing those stores is the right thing to do because McDonald’s can’t ignore the “needless human suffering in Ukraine.”
McDonald’s owns 84% of its Russian restaurants. In a recent financial filing, the company said Russia and Ukraine contributed 9% of the company’s revenue last year.
While the West tries to end Putin’s war in Ukraine through economic sanctions, some notable holdouts continue to do business in Russia.
As of Monday, March 7, it was business as usual for fast-food giants such as McDonald’s, KFC, and Burger King.
In addition, other major Western brands such as Pepsi, Coca-Cola, and Starbucks are still operating in Russia.
However, the West-based companies that have yet to suspend operations in Russia are under pressure from social media and their investors to get on board, The New York Times reports.
On Monday, for example, Deloitte became was the last of the Big Four accounting firms to say it will no longer operate in Russia, joining Ernst & Young, Pricewaterhousecoopers, and KPMG.
Deloitte said it is also cutting its ties to Russia’s ally, Belarus.
Related Story: How Companies Can Put an End to Putin
Franchisees Own Many Russian Fast-Food Outlets
For the fast-food companies, the situation is complicated by the fact that many of their stores are operated by franchisees and are closely linked to Russian banks or investors.
The big exception: McDonald’s, which “owns the vast majority of its 847 restaurants in Russia,” according to The Times.
In addition, fast-food and soda bottlers were among the first American entries into the Russian economy. McDonald’s, for example, has been there since 1990. And, Pepsi began selling its drinks in the Soviet Union in the early 1970s.
Starbucks has condemned Russia’s invasion of Ukraine and says it is donating profits from its Russian outlets to humanitarian relief efforts. Yum Foods, which has KFC and Pizza Hut, also says it’s donating to humanitarian relief groups.
But such donations aren’t easing the pressure on the holdout companies. #BoycottMcDonalds and #BoycottCocaCola are trending on Twitter.
Can you stop drinking Coca Cola please. They are refusing to withdraw from Russia. Let’s show them some people power.
— Deborah Meaden ?? (@DeborahMeaden) March 4, 2022
Oil Companies Feel Shareholder Pressure
Meanwhile, the BBC reported Monday on what’s happening in the energy sector since Russia invaded Ukraine:
“When the conflict in Ukraine broke out, energy firm BP came under immediate pressure. The company owns a large stake in Russian energy giant Rosneft, but within days it had announced the operation would be hived off.
“That was closely followed by pledges from Shell, ExxonMobil, and Equinor to cut their Russian investments following pressure from shareholders, as well as from governments and the public.”
Still, Shell continues to face criticism because it recently bought Russian crude oil.
On Tuesday, however, Shell apologized for the purchase amid international criticism and pledged to halt further purchases of Russian energy supplies, Associated Press reported.
Preliminary data from the U.S. Energy Department shows imports of Russian crude dropped to zero in the last week in February.