The temporary closure of McDonald’s 847 stores in Russia will cost about $50 million a month. A force of major American brands, including Starbucks Corp, PepsiCo Inc, and Coca-Cola Co, followed McDonald’s and would conclude some or all business in Russia following Moscow’s invasion of Ukraine.
McDonald’s, an icon of the post-Soviet era, runs 84% of its Russian locations itself and said it will continue paying all of its 62,000 staff and restaurant employees there. Other costs will come from sites it leases and supply chain operations.
With the decision to pull out, seven other fast-food brands with more than 2,600 outlets combined in Russia could also take a financial hit, although nearly all of those restaurants are owned and operated by independent franchisees.
Papa John’s International Inc said in a regulatory disclosure on Wednesday that it could end up having to absorb the cost of $15.2 million in receivables associated with its master franchise in Russia, which runs all of its 188 restaurants there.
Royalties from the franchisee made up less than 1% of Papa John’s total revenue in 2021, the company said. The pizza chain also said Wednesday that it has ceased all operational, marketing, and business support to and engagement with the Russian market, and that it is not receiving any royalties from restaurants there. Its Russian franchisee owns and operates its own supply chain.