Starbucks is exiting the Russian market, where a franchise partner owns and operates 130 locations. Starbucks said it will provide six months’ compensation and assistance “to transition to new opportunities outside of Starbucks” to the partner, Alshaya Group of Kuwait, which employs nearly 2,000 people in Russia.
The company, which first entered the Russian market in 2007, has previously condemned “Russia‘s unprovoked, unfair, and terrible attacks on Ukraine.” On March 8, about two weeks after the invasion, its partner “decided to immediately stop retail operations.
” Starbucks’ move comes after 850 McDonald’s restaurants in Russia began rebranding yesterday. The fast food chain first established in the country in 1990, following the breakup of the Soviet Union, but has since sold the franchise to Alexander Govor, a Siberian franchise partner.
Govor will operate under a new brand and retain its 62,000 employees for at least two years on comparable terms, according to the agreement. Starbucks will leave Russia after 15 years in business, joining firms such as McDonald’s, Exxon Mobil, and British American Tobacco in totally exiting the nation.
On Monday, the coffee behemoth declared that it will no longer have a presence in Russia. Starbucks has 130 outlets in the United States, yet they provide less than 1% of the company’s annual income. The Seattle-based corporation does not operate any of the outlets because they are all licenced.
Starbucks has announced that it will pay its almost 2,000 Russian employees for six months and assist them in finding new jobs outside of the coffee company. Consumers and investors have pressed Western corporations like Starbucks to terminate connections with Russia in protest of the Kremlin’s war in Ukraine, but licencing agreements take time to unwind.
Since March 8, Starbucks has ceased all operations in the country. Shipments of all Starbucks items were halted, and locations were temporarily closed. The financial impact of the suspension of commercial operations was not disclosed in the company’s most recent quarterly results, which were announced in early May. Kevin Johnson, the company’s former CEO, had promised to give royalties from the Russian business to humanitarian purposes.
However, it was undoubtedly a smaller financial setback than the one suffered by McDonald’s, which has been in Russia for almost 30 years. The suspension of the fast-food giant’s large Russian and Ukrainian businesses cost it $127 million in the first quarter, according to the company.
In 2021, the two markets accounted for 9% of the company’s sales. In Russia, the company had about 850 restaurants, the majority of which were run by the corporation rather than licensees.
McDonald’s stated on Thursday that it will sell those stores to a Siberian franchisee for an undisclosed fee, and that they would be rebranded.
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