McDonald's Quits Russia for Good

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Stocks news
17.05.2022
McDonald's Quits Russia for Good

McDonald's opened its first restaurant in Moscow 30 years ago, but, after temporarily shutting down more than 800 restaurants following the invasion of Ukraine, the company has decided to exit Russia altogether. However, leaving the country will not come cheap. McDonald's will take a significant write-off from exiting Russia – between $1.2 billion to $1.4 billion. 

McDonald's had 847 restaurants in Russia at the end of last year. When combined with the 108 stores in Ukraine, they accounted for 9% of the company's revenue in 2021.

McDonald's owns most of its restaurants in Russia, making it an asset-rich business. However, given the difficulty of the sale under current tough conditions, it will not be able to get anywhere close to the pre-war value of the businesses.

In a recent earnings report, McDonald's said the closure of its restaurants in Russia had cost it $127 million last quarter. Some $100 million of that consisted of discarded food.

What does this mean for me? 

McDonald’s stocks were unmoved on the early news. The market was yet to make a definitive decision about whether this was a good decision or not.

For you as a stock investor, now would be the time to watch your portfolio closely, especially if you have invested in brands that have a noteworthy presence in Russia. The longer the war continues, the more these companies will be pressed to make tough decisions.

 

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