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Ukraine crisis: McDonald’s, Starbucks, Coke, Pepsi suspend business in Russia

By Priyanka Verma 
Updated Date
Ukraine crisis: McDonald’s, Starbucks, Coke, Pepsi suspend business in Russia

Ukraine crisis: McDonald’s, Starbucks, Coca-Cola, PepsiCo and General Electric — ubiquitous global brands and symbols of US corporate might — all have announced they were temporarily suspending their business in Russia in response to the country’s invasion of Ukraine. “Our values mean we cannot ignore the needless human suffering unfolding in Ukraine,” McDonald’s President and CEO Chris Kempczinski said in an open letter to employees.

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The Chicago-based burger giant said it will temporarily close 850 stores but continue paying its 62,000 employees in Russia “who have poured their heart and soul into our McDonald’s brand”. Kempczinski said it’s impossible to know when the company will be able to reopen its stores.

“The situation is extraordinarily challenging for a global brand like ours, and there are many considerations,” Kempczinski wrote in the letter. McDonald’s works with hundreds of Russian suppliers, for example, and serves millions of customers each day.

Last Friday, Starbucks had said that it was donating profits from its 130 Russian stores — owned and operated by Kuwait-based franchisee Alshaya Group — to humanitarian relief efforts in Ukraine. But on Tuesday, the company changed course and said it would temporarily close those stores.

Alshaya Group will continue to pay Starbucks’ 2,000 Russian employees, Starbucks President and CEO Kevin Johnson said in an open letter to employees.

“Through this dynamic situation, we will continue to make decisions that are true to our mission and values and communicate with transparency,” Johnson wrote.

Coca-Cola Co. announced it was suspending its business in Russia, but it offered few details. Coke’s partner, Switzerland-based Coca-Cola Hellenic Bottling Co., owns 10 bottling plants in Russia, which is its largest market. Coke has a 21 per cent stake in Coca-Cola Hellenic Bottling Co.

PepsiCo and General Electric both announced partial shutdowns of their Russian business.

Pepsi, based in Purchase, New York, said it will suspend sales of beverages in Russia. It will also suspend any capital investments and promotional activities. But the company said it will continue to produce milk, baby formula and baby food, in part to continue supporting its 20,000 Russian employees and the 40,000 Russian agricultural workers who are part of its supply chain.

“Now more than ever we must stay true to the humanitarian aspect of our business,” PepsiCo CEO Ramon Laguarta said in an email to employees.

General Electric also said in a Twitter post that it was partially suspending its operations in Russia. GE said two exceptions would be essential medical equipment and support for existing power services in Russia.

McDonald’s is among those to take the biggest financial hit. Unlike Starbucks and other fast food companies like KFC and Pizza Hut, whose Russian locations are owned by franchisees, McDonald’s owns 84 pr cent of its Russian stores. McDonald’s has also temporarily closed 108 restaurants it owns in Ukraine and continues to pay those employee.

But since the Ukraine invasion last month, many corporations have ceased operations in Russia in protest. Among them is consumer goods conglomerate Unilever, which on Tuesday said it has suspended all imports and exports of its products into and out of Russia, and that it will not invest any further capital into the country.

In a more limited move, Amazon said Tuesday the company’s cloud computing network, Amazon Web Services, will stop allowing new sign-ups in Russia and Belarus.

Pressure had been mounting on companies that remained in the country. Hashtags to boycott companies like McDonald’s, Coca-Cola and PepsiCo quickly emerged on social media.

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