McDonald’s, KFC, Starbucks and Coca-Cola will Pause Sales in Russia

McDonald’s, KFC and Starbucks are shutting their restaurants and cafes in Russia, and Coca-Cola is suspending its operations there in response to Russia’s invasion of Ukraine. PepsiCo is also pulling some products from the country and

“McDonald’s has decided to temporarily close all our restaurants in Russia and pause all operations in the market,” CEO Chris Kempczinski said in a statement this week.

There were 847 locations of McDonald’s in Russia at the close of last year, according to an investor document.

Globally, most McDonald’s locations are operated by franchise operators. But that’s not the case in Russia, where 84% of locations are operated by the company, according to the document. Russia’s restaurants, along with another 108 in Ukraine, all operated by McDonald’s, accounted for 9% of the company’s revenue in 2021, according to the document.

“In Russia, we employ 62,000 people who have poured their heart and soul into our McDonald’s brand to serve their communities. We work with hundreds of local, Russian suppliers and partners who produce the food for our menu and support our brand,” Kempczinski said. “And we serve millions of Russian customers each day who count on McDonald’s. In the thirty-plus years that McDonald’s has operated in Russia, we’ve become an essential part of the 850 communities in which we operate.”

But, he added, “at the same time, our values mean we cannot ignore the needless human suffering unfolding in Ukraine.”

KFC & Pizza Hut

Yum Brands (YUM), which owns KFC, Pizza Hut, Taco Bell and the Habit Grill, said in a statement that it “has suspended all investment and restaurant development in Russia.”

The company added that it will “redirect all profits from operations in Russia to humanitarian efforts,” in addition to making donations to the Red Cross through the Yum Brands Foundation. Yum has about 1,000 KFC restaurants and 50 Pizza Hut locations in Russia. The company said that most of these are operated by independent owners.

However, with the ambiguous wording, the company did not comment on whether it wanted to limit or stop current restaurant operations in Russia.

Starbucks

In a Tuesday message to employees, Starbucks CEO Kevin Johnson said that “today, we have decided to suspend all business activity in Russia.”

He added that “our licensed partner has agreed to immediately pause store operations and will provide support to the nearly 2,000 [employees] in Russia who depend on Starbucks for their livelihood.” Johnson added that Starbucks is halting shipment of all Starbucks products to Russia. “We condemn the horrific attacks on Ukraine by Russia and our hearts go out to all those affected,” he said.

Coke

Coca-Cola also said Tuesday that it is “suspending its business in Russia.”

The company stated that “our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine,” adding that it will monitor the situation as things change.

PepsiCo, Danone and Unilever

On Tuesday, PepsiCo CEO Ramon Laguarta laid out how PepsiCo is approaching the situation. “Given the horrific events occurring in Ukraine we are announcing the suspension of the sale of Pepsi-Cola, and our global beverage brands in Russia, including 7Up and Mirinda.” Laguarta added that Pepsi is suspending capital investments, ads and promotional activity in Russia. But PepsiCo will continue to sell some of its products, including baby formula, baby food, milk and other dairy options.

“We have a responsibility to continue to offer our other products in Russia, including daily essentials,” Laguarta said. “By continuing to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and uncertainty ahead,” he added.

Farryl Bertmann, a registered dietitian and senior lecturer in the nutrition and food sciences department at the University of Vermont, warned that if big food companies leave Russia entirely the citizen population could suffer, even if they have other sources of food.

“I feel very strongly that people should be given the opportunity to purchase a variety of foods at different price points,” she said. “That can only be successfully done if access is there.”

She said that “ultimately, foods need to be made available,” adding, “I would be very concerned if the food environment [were] to dramatically change.”

Other companies have taken a similar approach to Pepsi.

Danone (DANOY), which makes Silk milk alternatives, Activia, Oikos yogurt, baby formula and more, said in a LinkedIn post on Sunday that “we have decided to suspend all investment projects in Russia,” adding that it would “maintain our production and distribution of fresh dairy products and infant nutrition, to still meet the essential food needs of the local population.”

Unilever (UL) made a similar statement this week, saying that “we will continue to supply our everyday essential food and hygiene products made in Russia to people in the country,” adding “we will keep this under close review.”

The company noted it is has suspended imports of its products to Russia and is stopping all investment in the country, in addition to stopping exports from there. It said it won’t profit from its presence in Russia.

Facing pressure

The announcements followed pressure from critics who called for the companies to leave Russia. Several Western companies across multiple industries have halted operations in Russia after the country’s attack on Ukraine, yet some restaurants are continuing to sell their products in the country. For some restaurant chains, that may be because locations are operated by franchises, giving corporate owners less control.

On Twitter, people used boycott hashtags to target companies like McDonald’s and PepsiCo that until today were quiet about their plans for Russia.

McDonald’s, PepsiCo and other companies were called out by New York State Comptroller Thomas DiNapoli. Before McDonald’s made its announcement, DiNapoli emailed a number of companies represented in the New York State Common Retirement Fund, including PepsiCo and McDonald’s, urging them to stop doing business with Russia.

“Companies like McDonald’s and PepsiCo, which have a large footprint in Russia, need to consider whether doing business in Russia is worth the risk during this extraordinarily volatile time,” DiNaPoli said in a statement.

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