I’m Not Lovin’ it- McDonald’s reaction to the Russian invasion
The conflict in Ukraine and the humanitarian crisis in Europe has caused unspeakable suffering to innocent people. As a System, we join the world in condemning aggression and violence and praying for peace.
Our number one priority from the start of this crisis has been — and will remain our people. — CEO Chris Kempczinski
McDonald’s first arrived in Russia on 31 January 1990, during the final months of the Soviet Union. Thousands of people were reported to have queued the first day it opened. Since then the chain became a symbol of American capitalism in the country.
McDonald’s was not only popular for its burgers in Russia, as of May 2019 nearly 40 percent of Russians purchased coffee to go at McDonald’s or McCafe.This made it the most popular chain in the country by consumer share.
McDonald’s restaurants in Russia and Ukraine account for 2% of its systemwide sales, roughly 9% of its revenue, and 3% of its operating income. A majority of McDonald’s locations in Russia are owned by the company, while the rest are operated by franchisees. While this generates greater revenue for the company, it opens it up to greater risk in times of turmoil.
McDonald’s Shut Down in Russia
McDonald’s was criticized for staying silent on the war, given its relatively large Russian footprint. After two weeks of the Russian invasion, McDonald’s announced it would close all 847 of its restaurants in Russia while still paying its 62,000 Russian employees, and its Ronald McDonald House Charities will continue to operate.
“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,At the same time, our values mean we cannot ignore the needless human suffering unfolding in Ukraine.”-Kempczinski
McDonald’s closure of restaurants came after Yum Brands suspended restaurant development and investment in Russia. The KFC owner has more than 1,000 restaurants in Russia that account for roughly 2% of its systemwide sales.
Russia proposed a local replacement for fast food giant McDonalds, following its withdrawal from the country as a result of its invasion into Ukraine. Uncle Vanya’s could be set to take the place of McDonald’s, with the brand recently filling a familiar-looking trademark.
Aid to Ukraine
While McDonald’s has closed down its locations in Ukraine due to safety reasons, it is still taking care of its Ukrainian employees by providing them their full salaries and donating $5 million to its employee assistance fund. The company is monitoring the humanitarian situation as well.
McDonald’s is helping feed soldiers and civilians on the ground in Ukraine, amid Russia’s invasion of the country. The Ukrainian branches of McDonald’s have announced they will be donating food to those in need.
They will use their kitchens to distribute ingredients and ready-made meals to the Ukrainian military, hospitals, and civilians.McDonald’s Ukraine posted on social media that it is working with local councils to distribute the food to those who need it. The donations from the burger giant include ingredients and foods that don’t need to be cooked: rolls, donuts, desserts, cheese, milk, water, juices, tomatoes, apple slices, and eggs. The chain is also donating other basic necessities like glasses, forks, and spoons.
Brands that take a stand
Since the invasion of Ukraine began, over 450 companies including Apple, Amazon, H&M, Ikea and Starbucks, have announced their withdrawal from Russia — but some companies have continued to operate in Russia undeterred. Along with the mass exodus of companies, Russia faces international sanctions that are disrupting supply chains. This could disrupt franchises that rely on external supply in Russia.
According to a Morning Consult poll, 75% of Americans said they support companies cutting business ties with Russia. And more than 95% of respondents said that inaction was not a viable response.
“They cannot be associated in any way, shape, or form with the Russian regime, and that’s why they’ve got to leave, those Western companies that remain are committing — are making an enormous strategic mistake, because they will be seen increasingly in the court of public opinion to be completely insensitive.” — Lee, a professor at Carleton University in Ottawa.
The reasons a brand stays in Russia are not nearly as important as the brand image that would portray. Brands associated with the Russian regime and all the death and destruction it is causing in Ukraine will be judged harshly by the public.
Brands can play an important role in swaying public sentiment against Putin. The more brands that exit, the more likely it is that the Russian people will be disillusioned by Putin’s strategy on Ukraine.
While the McDonald’s closure followed the public outcry against the restaurant for its inaction, the impact of its exit was felt profoundly by Russians who showed up in thousands on the day before the restaurant shut down. Many people even stocked their fridge with enough burgers to last a month.
In a crisis like this, inaction by brands is inexcusable. They need to be loyal to their brand purpose and values. If they could sway public sentiment in Russia even a little , it could lead to a butterfly effect.
Moreover, brands need to consider the challenges that will come with operating in a country like Russia to begin with. This makes the decision to leave not just a moral but a political and economic one.
