In a significant move reflecting the complex challenges faced by Western businesses operating in Russia, Domino’s Pizza has announced the closure of all 142 of its stores in the country. This decision makes Domino’s one of the latest major Western fast-food chains to withdraw from the Russian market, following the departure of McDonald’s and Starbucks over a year ago.
The decision comes as DP Eurasia, the franchise holder for Domino’s Pizza in Russia, Turkey, Azerbaijan, and Georgia, revealed plans to file for bankruptcy for its Russian subsidiary, DPRussia. The exit from the Russian market underscores the intricate dilemmas that Western companies have encountered since the onset of the Ukraine war. The Russian government’s measures have not only amplified the difficulty of doing business but have also escalated the costs of maintaining operations in the country. Moreover, some firms have experienced the seizure of local assets by Russian authorities, as seen in the cases of Carlsberg and Danone.
Western companies in Russia have been navigating a progressively challenging environment, raising the question of why numerous firms have persisted in staying despite the escalating risks. DP Eurasia’s parent company expressed that due to the increasingly hostile business landscape, the closure of DPRussia’s operations was an unavoidable step. The company further stated that this decision would lead to the discontinuation of ongoing attempts to sell DPRussia as a functioning business entity, inevitably resulting in the group’s exit from the Russian market. The financial repercussions of this potential insolvency remain uncertain.
As a pivotal player in the Russian pizza delivery sector, DP Eurasia’s departure from the market carries significant implications. The company had been operating 142 outlets across the country, ranking as the third-largest pizza delivery business in Russia. Back in December, the franchise holder had indicated a review of its presence in Russia, with the prospect of a sale being explored.
While the closure marks the end of the Domino’s Pizza brand in Russia under its current ownership, it raises the possibility of these pizza outlets continuing to operate under new ownership and branding. A precedent for this can be observed in the cases of McDonald’s and Starbucks. Following their exit from Russia, both chains were taken over by local players and rebranded. Starbucks transformed into Stars Coffee, while McDonald’s rebranded as “Vkusno i tochka,” translating to “Tasty, period.”
DP Eurasia’s exit from Russia carries significant implications as it ranks third in the country’s pizza delivery sector. The closure terminates ongoing attempts to sell DPRussia and presents financial uncertainties. The possibility of new ownership and rebranding, as seen with Starbucks and McDonald’s, lingers for these pizza outlets.
Domino’s Pizza Inc., listed on the NYSE, ceased Russian market support in 2022. Yale University researchers noted over 1,000 foreign firms have left or paused Russian operations post Ukraine invasion. This closure aligns with the broader trend of Western businesses reassessing their stance in Russia’s evolving business landscape.
In response to this development, Domino’s Pizza Inc., listed on the New York Stock Exchange, emphasized that it ceased extending support to the Russian market through its subsidiaries in early 2022. This move signals the company’s strategic shift away from the Russian market.
Notably, this decision aligns with a larger trend observed by researchers at Yale University. They have reported that over 1,000 foreign companies have either exited or suspended operations in Russia since the Kremlin initiated a full-scale invasion of Ukraine. This statistic underscores the growing challenges faced by Western businesses operating in Russia amidst shifting geopolitical dynamics.
In summary, Domino’s Pizza’s decision to close all 142 of its outlets in Russia underscores the complex challenges Western businesses face in maintaining operations in the country. The move reflects the evolving geopolitical landscape and the formidable hurdles that businesses must overcome in order to thrive in the Russian market.
