McDonald’s Pullout From Russia Results In Millions Of Money, Food Going To Waste

Businesses are pulling out from Russia, a result of the country’s invasion of Ukraine. Among the known companies who have pulled out include famed fast-food chain McDonald’s.

Last month, McDonald’s announced that it was temporarily closing down its restaurants in Russia due to the ongoing invasion of Ukraine. Such has resulted in losses, roughly about $127 million last quarter, CNN reported.

The move also means that it would leave thousands of Russian employees without a job. However, McDonald’s promised to continue paying about 62,000 Russian employees despite shutting down its operations.

"In both countries, we have continued to pay employees and provide additional support," CEO Chris Kempczinski said in a call on Thursday.

However, those plus the supplies McDonald’s use have cost the company about $27 million. The $100 million was from food and other items that the food chain needs to get rid of.

"Results included ... $100 million of costs for inventory in the company's supply chain that likely will be disposed of due to restaurants being temporarily closed," an official statement from the company read.

Kempczinski however added that an update on their plans will be announced by the second quarter.

There are roughly 847 McDonald’s restaurants in Russia at the close of last year. There are another 108 in Ukraine, accounting for 9% of the company’s revenue in 2021.

But as a result of these moves, McDonald’s has taken a hit in net income. The figures fell 28% in three months as of Mar. 31, 2022.

However, McDonald’s sales grew elsewhere.

Globally, sales at restaurants open at least 13 months jumped 11.8% in the quarter, driven by international locations. In the United States, sales popped 3.5%, thanks in part to higher prices.

McDonald's prices were up about 8%.

"Consumers are definitely worried about inflation," CFO Kevin Ozan said. "They're concerned about energy and gas prices." But, he noted, the fact that groceries are also getting more expensive has "probably been a little benefit." He added that "We are keeping ... a close watch on lower-end consumers just to make sure that we're still providing the right value."