McDonald’s Estimates Russian Eatery Shutdown Will Cost $50M Monthly

While McDonald’s is still calculating the actual cost of temporarily shuttering its eateries in Russia, the world’s largest fast-food restaurant chain estimates it will lose around $50 million per month, or roughly 5 cents to 6 cents per share, CFO Kevin Ozan said during a presentation at the UBS Global Consumer and Retail Conference.

McDonald’s said on Tuesday (March 8) that it was closing all 850 of its quick-serve restaurants in Russia in response to Russian President Vladimir Putin’s continued attacks on Ukraine. The majority of the locations are owned by the company, not franchisees. McDonald’s also paused operations on its 108 restaurants in Ukraine.

Starbucks, Yum Brands, Papa John’s, Coca-Cola, Levi Strauss, Pepsi and Apple are just a handful of the more than 100 brands that have halted operations and suspended sales in Russia as the attack continued into its second week.

See also: From Levi’s to Danone, Brands Face High Stakes Decision on Russian Response

McDonald’s said it would continue to pay full salaries to all Ukrainian employees and has committed to paying all of its estimated 62,000 Russian employees during the temporary closure.

Ozan said McDonald’s would also continue covering the lease payments for its Russian locations, would continue paying supply chain costs and other expenses, CNBC reported.

​​“We expect this to be temporary and we certainly don’t take this decision lightly, but for us this is about doing what we think is the right thing to do, both for the global business and for our people locally,” Ozan said.

Combined, Russia and Ukraine account for an estimated 2% of McDonald’s general sales, 9% of its revenue and 3% of its operating income, per CNBC’s report. McDonald’s has some of the deepest roots in Russia among American franchises, having opened its first location in the Soviet Union in Moscow in 1990 before the state collapsed on Dec. 26, 1991.

“As we move forward, McDonald’s will continue to assess the situation and determine if any additional measures are required. At this juncture, it’s impossible to predict when we might be able to reopen our restaurants in Russia,” CEO Chris Kempczinski said in an email to McDonald’s employees and franchisees.

“We are experiencing disruptions to our supply chain along with other operational impacts. We will also closely monitor the humanitarian situation.”