UPDATE: March 9, 2022: As of Wednesday morning, Papa John's has also suspended all corporate operations in Russia. The pizza chain's Russian units are all owned by independent franchisees and managed by a master franchisee who "controls operations and provides all supplies and ingredients for the restaurants through a supply chain that it owns and operates." The company has ceased all business support and engagement with the Russian market and is donating dry goods and ingredients to refugees in Eastern Europe through a partnership with World Central Kitchen.
- Starbucks and McDonald's announced Tuesday that they are halting business activity in Russia following the country's invasion of Ukraine. Neither company has forecasted when their Russian stores could reopen.
- The Golden Arches has 850 restaurants and 62,000 workers in Russia, and 84% of its Russian restaurants are company-owned. Starbucks has 130 total restaurants in Russia, all of which are licensed by but not owned by the company, according to data published by the Yale Chief Executive Leadership Institute on Tuesday.
- McDonald's is experiencing supply chain issues "along with other operational impacts" in Russia, CEO Chris Kempczinski said in a statement. The Eurasian country made up roughly 0.7% of McDonald's global value in 2020, Ramsey Baghdadi, consumer analyst at GlobalData, wrote in an emailed statement. Starbucks' Russian stores also account for less than 1% of its worldwide revenue.
The small size of McDonald's Russia business implies "fears of losing sales is not the main factor at play here," according to Baghdadi, and it would seem Starbucks is in the same boat.
The mega chains attracted criticism and threats of boycotts over their silence on the Russia/Ukraine conflict and continued presence in Russia. Rival chains Papa John's, which has yet to pause operations at its 185 Russian units according to the Yale data, and Yum Brands, which temporarily ceased Russian business activity Monday, have also drawn consumer scorn for not moving to punish Russia with their pocketbooks sooner.
Yum Brands has more restaurants in the region than McDonald's, with 1,000 KFC locations and 50 Pizza Huts. Unlike the Golden Arches, however, the majority of these units are operated by independent owners under licensed or franchise agreements.
Massive franchised systems would make it more difficult to cease all operations in a country than it is for non-franchised businesses, such as retailers, Baghdadi said.
"As 72% of consumer purchases are driven by a brand's ethics or support shown toward a social cause, it becomes difficult for these companies to balance consumer expectations and their operational needs, putting pressure on international fast food restaurants," Baghdadi said.
Still, McDonald's was quick to halt operations in Ukraine. The company paused store operations at its 100 Ukrainian restaurants on Feb. 24, more than 10 days before it did the same in Russia, which could alienate U.S. consumers. Starbucks does not have stores in Ukraine.
But the burger chain, along with Starbucks and Yum, have announced investments to support employees impacted by the conflict. McDonald's continues to pay full salaries for employees in Ukraine and said it will do so for all of its workers in Russia as well. Starbucks said it will continue to "provide support"to its roughly 2,000 Russian employees, but did not provide details. McDonald's also said that it will "closely monitor the humanitarian situation," though it did not disclose specifics.
Starbucks initially donated royalties received from Russian business operations to humanitarian relief efforts in Ukraine, and The Starbucks Foundation gave $500,000 to World Central Kitchen and the Red Cross to help their efforts in Ukraine.
By contrast, Yum donated $1 million to the Red Cross to support Ukrainians, has activated its Yum Disaster Relief Fund to support Ukrainian employees and is matching employee donations to UNICEF, Red Cross, World Food Programme and International Rescue Committee efforts in Ukraine.
McDonald's is making the biggest financial commitment — donating $5 million to its Employee Assistance Fund and supporting the International Red Cross's relief efforts in Ukraine. The Ronald McDonald House Charity in Ukraine is sharing medical supplies throughout the nation, and RMHC Poland and RMHC Latvia are also providing aid to the region.
These gestures could help the companies save face as Russia's attacks intensify, especially since they align with the Biden administration's Tuesday announcement that the U.S. will no longer import Russian oil.