McDonald's Officially Leaves Russia After 32 Years, Write-Off Of Up To $1.4 Billion

McDonald's has announced that it will cease operations in Russia after more than 30 years.

A local bidder will purchase the fast-food chain's Russia operation, which employs 62,000 people and has 850 outlets – including franchisee-run locations.

McDonald's explained the humanitarian crisis in Ukraine and the resulting unstable working climate have led the fast-food chain to conclude that "continued ownership of the business in Russia is neither tenable nor consistent with company values."

According to The New York Times, the measure will "de-arch" such establishments. That means the buyer will not utilize the McDonald's name, logo, or branding in any way.

McDonald's said in a statement that one of its top responsibilities is to ensure that it will pay its employees in Russia until the sale is completed and that they have future employment with any possible buyer. Still, the fast-food giant will keep its trademarks in Russia.

McDonald's would write off $1.2 billion to $1.4 billion as a result of the move and recognize "foreign currency translation losses," according to the company's statement.

The fast-food giant, which operates 39,000 restaurants in more than 100 countries, has since invested billions of dollars in its Russian supply chain and restaurants.

Chris Kempczinski, McDonald's president and chief executive, said in a BBC News that the decision was "extremely difficult." Still, the company wants to stay true to its principles.

McDonald's was one of the first Western businesses to build a store in Russia, according to Bloomberg, when it opened a branch in Moscow's Pushkin Square in 1990, shortly before the Soviet Union fell apart.

On launch day, 30,000 people reportedly queued outside the eatery. Because of the crowds, the Pushkin Square site had to stay open hours later than intended.

Darra Goldstein, a Russia expert at Williams College, told CNN that the company's arrival in Moscow was about more than just Big Macs and fries. It was the most visible manifestation of Soviet Union President Mikhail Gorbechev's efforts to open up his collapsing country to the outside world.

McDonald's revealed in its most recent financial report that closing its outlets in Russia cost the company $127 million last quarter. Staff expenditures, lease fees, and supplies accounted for about $27 million. The remaining $100 million came from food and other products that had to be discarded.