Company initiates process to sell its Russian
business, seeks to include future employment for Russian employees
as part of terms
CHICAGO, May 16, 2022
/PRNewswire/ -- After more than 30 years of operations in the
country, McDonald's Corporation announced it will exit the
Russian market and has initiated a process to sell its Russian
business. This follows McDonald's announcement on March 8, 2022, that it had temporarily closed
restaurants in Russia and paused
operations in the market.
The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable
operating environment, have led McDonald's to
conclude that continued ownership of the business in
Russia is no longer tenable, nor
is it consistent with McDonald's values.
As part of McDonald's decision to exit, the Company is pursuing
the sale of its entire portfolio of McDonald's restaurants in
Russia to a local buyer. The
Company intends to initiate the process of "de-Arching" those
restaurants, which entails no longer using the McDonald's
name, logo, branding, and menu, though the Company will continue to
retain its trademarks in Russia.
McDonald's priorities include seeking to ensure the employees of
McDonald's Russia continue to be
paid until the close of any transaction and that employees have
future employment with any potential buyer.
McDonald's President and Chief Executive Officer, Chris Kempczinski, said, "We have a long history
of establishing deep, local roots wherever the Arches shine. We're
exceptionally proud of the 62,000 employees who work in our
restaurants, along with the hundreds of Russian suppliers who
support our business, and our local franchisees. Their dedication
and loyalty to McDonald's make today's announcement extremely
difficult. However, we have a commitment to our global community
and must remain steadfast in our values. And our commitment to our
values means that we can no longer keep the Arches shining
there."
McDonald's restaurants in Ukraine remain closed while the Company
continues to pay full salaries for its employees in the country and
continues to support local relief efforts led by Ronald McDonald
House Charities. Across Europe,
the McDonald's System is supporting Ukrainian refugees through food
donations, housing and employment.
As a result of its exit from Russia, the Company expects to record a
charge, which is primarily non-cash, of approximately $1.2-1.4 billion to write off its net investment
in the market and recognize significant foreign currency
translation losses previously recorded in shareholders'
equity.
Financial Information
The Company reaffirms its prior 2022 Outlook with the following
updates:
- The Company expects operating margin to be in the 40% range as
a result of the charge for Russia.
Excluding impairment and other strategic charges, the Company
expects adjusted operating margin to be in the mid-40%
range.
- Excluding the closure of all restaurants in Russia, the Company expects:
-
- net restaurant unit expansion will contribute about 1.5% to
2022 Systemwide sales growth in constant currencies.
- over 1,300 net restaurant additions in 2022.
- The Company expects 2022 capital expenditures to be
approximately $2.1 to $2.3 billion.
About McDonald's
McDonald's is the world's leading
global foodservice retailer with more than 39,000 locations in over
100 countries. Approximately 95% of McDonald's restaurants
worldwide are owned and operated by independent local business
owners.
Forward-Looking Statements
This document contains
forward-looking statements about future events and circumstances.
Generally speaking, any statement not based upon historical fact is
a forward-looking statement. In particular, statements regarding
McDonald's plans, strategies, prospects and expectations regarding
its business and industry are forward-looking statements. They
reflect McDonald's expectations, are not guarantees of performance
and speak only as of the date hereof. Except as required by law,
McDonald's does not undertake to update such forward-looking
statements. You should not rely unduly on forward-looking
statements. McDonald's business results are subject to a variety of
risks, including those that are described in its Quarterly Report
on Form 10-Q for the quarter ended March 31,
2022 and subsequent filings with the Securities and Exchange
Commission.
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SOURCE McDonald's Corporation