McDonald’s Corp (MCD.N) announced on Wednesday that the temporary closure of its 847 stores in Russia will cost the fast-food chain approximately $50 million per month.
Following McDonald’s announcement, a slew of major American brands, including Starbucks Corp (SBUX.O), PepsiCo Inc (PEP.O), and Coca-Cola Co (KO.N), announced on Tuesday that they would suspend some or all operations in Russia in response to Moscow’s invasion of Ukraine.
McDonald’s, a post-Soviet icon, operates 84 percent of its Russian locations and has stated that it will continue to pay all of its 62,000 staff and restaurant employees there. Other expenses are incurred as a result of leased sites and supply chain operations, according to Chief Financial Officer Kevin Ozan, who spoke at a UBS conference on Wednesday.
Despite the fact that nearly all of those restaurants are owned and operated by independent franchisees, seven other fast-food brands in Russia with a combined total of more than 2,600 outlets may suffer financial losses as a result of any decision to withdraw. In a regulatory filing on Wednesday, Papa John’s International Inc said it may have to absorb the cost of $15.2 million in accounts receivable affiliated with its master franchisee in Russia, which runs all of its 188 restaurants there.
According to the company, franchisee royalties accounted for less than 1% of total revenue at Papa John’s in 2021.
The pizza chain also announced on Wednesday that it has ceased all operational, marketing, and business support to – and engagement with – the Russian market, and that it is no longer receiving royalties from Russian restaurants. Its franchisee in Russia currently operates its very own supply chain.
