News

Even McDonald’s & Starbucks Are Suspending Operations in Russia

2022-03-09 , 5:20 pm

On the growing list of Multinational Companies (MNCs) that are pulling out from Russia, you may add McDonald’s, Starbucks, and Coca Cola to the list now.

That’s right, besides IKEA, Apple, H&M, and Disney, the Russians will now be deprived of McDonald’s fries, Starbucks’ brand of arabica beans, plus the twelve teaspoons of sugar in Coca Cola.

From a health standpoint, it might not necessarily be a bad thing, but in terms of employment, investment, supply of foods and beverages, the country will be taking another hit.

McDonald’s Temporary Closure

In a statement on Tuesday (8 Mar), CEO Chris Kempczinski said, “McDonald’s has decided to temporarily close all our restaurants in Russia and pause all operations in the market.”

There are a total of 847 McDonald’s outlets in Russia, according to an investor document.

While most McDonald’s locations are operated by franchise operators across the world, that’s actually not the case in Russia, surprisingly enough.

According to the aforesaid document, 84% of its locations are operated by the company itself, alongside 108 outlets in Ukraine. They made up for 9% of the company’s revenue in 2021.

“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 have operated in Russia, we’ve become an essential part of 850 communities in which we operated.”

However, Kempczinki declared that their values dictate that they can ignore the “needless human suffering” that is taking place in Ukraine.

Hence, the company would rather part with nearly a tenth of its yearly revenue than abandon its morals.

I was going to bring up the obesity rate thing, but you know what, good job McDonald’s.

Starbucks’ Statement

On the same day, Starbucks CEO Kevin Johnson told his employees in a message that they were going to suspend all business activity in Russia.

He supplemented that “our licensed partner has agreed to immediately pause store operations and will provide support to nearly 2,000 [employees] in Russia who depend on Starbucks for their livelihood.”

Similarly, the coffee chain franchise will be stopping shipments of all Starbucks products flowing into Russia, in condemnation of the horrific attacks that Russia has laid upon Ukraine.

“Our hearts go out to all those affected,” Johnson said.

Coca-Cola Joining the Coalition

It almost feels like these CEOs came together in a room to discuss this matter because the beverage company announced on the same day that they were suspending all of their business in Russia as well.

The company was rather brief with their statement, saying, “Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine,” adding that it will continue to observe the situation as things change.

PepsiCo, Danone and Unilever

On the exact same day, PepsiCo CEO Ramon Laguarta addressed how PepsiCo was going to handle the situation.

First off, Laguarta declared that the beverage company would be suspending its global beverage brands in Russia, which include Pepsi-Cola, 7-Up and Mirinda.

The company would also be stopping its capital investments, advertisement campaigns and promotional activities.

All that money going down to the drain…

However, compared to the aforementioned brands, PepsiCo will continue to sell some of its products like baby formula, baby good, milk, and other dairy options.

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

In essence, PepsiCo is taking one foot out, but it won’t be abandoning Russia completely.

Regardless of how crazy and destructive Putin’s ambitions are, the Russian citizens on the ground—especially those with anti-war sentiments or simply want nothing to do with the invasion—don’t deserve to suffer so terribly for the actions of its autocratic government, which it can’t control or criticise.

Citizens Will Suffer From the Mass Withdrawal

Farryl Bertmann, a licensed dietitian and senior lecturer in the nutrition and food sciences department at the University of Vermont forewarned that if all the big food companies leave Russia, the citizen population could suffer, even if they had other alternatives for food.

She feels strongly that the Russian citizens should be given the chance to buy a variety of food at various price points, but it can only be accomplished if there is access and supply.

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

Pepsi is not alone in the stance that it’s taken.

Danone, which produces Silk milk alternatives, Activia, Oikos yoghurt, baby formula and more, announced in a LinkedIn post on Sunday (6 Mar) that they would desist all investment projects in Russia, but it would “maintain our production and distribution of dairy products and infant nutrition, to still meet the essential food needs of the local population.”

Likewise, Unilever made a statement this week, affirming that it would continue to supply everyday essential goods and hygiene products made in Russia to the people in the country, though the production will be under close scrutiny.

Unilever is a British multinational consumer goods company that produces food, conditions, ice cream, tea, vitamins, minerals, and more.

It clarified that it has suspended imports of its products to Russia, ceased all investments within the country, and is stopping any exports that are arriving from Russia. Hence, it won’t be profiting from its presence in Russia.

All that can be said about the situation is, doing business in conflict zones is like treading on thin ice; it’s either you avoid it completely or take it slow, lest the ground cracks beneath your feet, along with the millions of citizens standing on the same plate.