Alexander Govor to buy and rebrand all McDonalds in Russia

A closed McDonald's restaurant in Moscow, Russia. Photo: Evgenia Novozhenina/Reuters

McDonald's has negotiated an agreement to sell all of its Russian restaurants to one of its licensees, the businessman Alexander Govor, who would manage them under a new brand.

McDonald's has lost approximately $55 million (£44 million) per month due to the temporary closure of hundreds of restaurants in Russia in March after Vladimir Putin invaded Ukraine.

McDonald's announced on Monday that it would sell the stores and leave Russia, citing the humanitarian crisis caused by the war and the unpredictability of the operating environment as reasons why continuing to operate restaurants in Russia was "no longer viable" or "consistent with McDonald's values."

McDonald's announced on Thursday that Govor, which owns 25 restaurants in Siberia, has agreed to purchase its 850 Russian outlets and operate them under alternative branding.

McDonald's did not disclose the prices at which the restaurants were sold. In 2012, its Russian business accounted for 9 percent of the company's total yearly revenue, or over $2 billion.

Govor, a licensee since 2015, has pledged to maintain McDonald's 62,000 Russian employees on equal terms for at least two years and assume current obligations to suppliers, landlords, and utilities. He also committed to cover McDonald's corporate staff' salary until the sale is finalized.

McDonald's stated that the sale is contingent on regulatory approval but is expected to close within a few weeks.

Govor is also a half-owner of Neftekhimservis, a construction investor who owns an oil refinery in Siberia, and a board member of another company that owns projects in Siberia, including the Park Inn hotel private clinics in Novokuznetsk.

In 1990, McDonald's was one of the earliest western consumer brands to reach Russia. After the end of the cold war, the opening of its enormous, glittering store on Pushkin Square in Moscow shortly after the fall of the Berlin Wall signaled a new age of optimism.

This is the first time the corporation has "de-arched" or left a significant market. It intends to begin eliminating golden arches and other company-branded symbols and signs. McDonald's stated that it would maintain its trademarks in Russia and, if required, take actions to enforce them.

Uncertain if other U.S. chains will follow McDonald's lead and exit Russia. McDonald's owned 84 percent of its Russian locations, giving it greater operational control than many of its competitors whose stores are franchised.

The 130 Starbucks locations in Russia have been closed since early March. Alshaya Group, a franchisee in the country located in Kuwait, continues to pay its 2,000 Russian employees.

Papa John's has ceased corporate activities in Russia and no longer accepts royalties from its 185 shops. However, the stores, which Christopher Wynne of Colorado owns, remain open. Thursday, a message was left with one of Wynne's companies.

McDonald's left open the prospect that it may return to Russia in the future.

In a letter to staff, Chris Kempczinski, the CEO of McDonald's, "It is impossible to predict what the future may hold, but I choose to end my message with the same spirit that brought McDonald's to Russia in the first place: hope." "Therefore, let us not conclude with a farewell." Instead, let's use the Russian phrase "until we meet again."

Publish : 2022-05-20 12:51:00

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