McDonald’s, Coca-Cola, Starbucks join consumer giants suspending business in Russia

Some of the most prominent global consumer giants – McDonald’s Corp., Starbucks Corp., The Coca-Cola Co., PepsiCo Inc. and packaged-goods giant Unilever PLC – are suspending operations in Russia, ratcheting up the pressure on brands that continue to do business in the country amid its invasion of Ukraine.

On Tuesday, McDonald’s announced that it would temporarily close its restaurants in Russia, where it has 847 locations and employs roughly 62,000 people, adding that it will continue paying their salaries. In an e-mail to McDonald’s employees and franchisees on Tuesday, CEO Chris Kempczinski wrote that “our values mean we cannot ignore the needless human suffering unfolding in Ukraine.”

Unilever, which owns hundreds of brands including Dove and Knorr, on Tuesday suspended imports and exports of its products in Russia, and cut off advertising spending there, but did not fully halt operations. In a statement, CEO Alan Jope said the company will continue supplying essential food and hygiene products made in Russia in that market.

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Unilever operations in Ukraine have also stopped, though the company is donating products to relief efforts and is providing financial support and evacuation assistance to employees as necessary, the statement said.

Coca-Cola and PepsiCo both announced they would suspend their business in Russia, though PepsiCo said it would continue to sell essentials such as milk, baby formula and baby food.

And also on Tuesday, Starbucks announced that it would suspend business operations, including shipping products to Russia. The company’s licensed partner, which owns and operates its 130 locations in Russia, has agreed to pause store operations, CEO Kevin Johnson wrote in a note to employees.

“In times like these, as a company and as partners, we strive to never be a bystander,” Mr. Johnson wrote in an earlier note last Friday.

Tuesday’s announcements add some major household names to the corporate pushback against Russia’s invasion of Ukraine – including stalwarts of the Western consumer lifestyle that have acted as powerful symbols in Russia in the past.

McDonald’s opened its first location in the Soviet Union on downtown Moscow’s Pushkin Square in 1990, just a few months after the fall of the Berlin Wall. The venture was led by Canadian businessman George Cohon, who referred to his project as “burger diplomacy.” PepsiCo first began operating in Russia during the Cold War, the company noted in its statement Tuesday, which said the brand “helped create common ground between the United States and the Soviet Union.”

The moves are just the latest in a slew of announcements from companies suspending operations or pulling out of Russia entirely. Business leaders have felt increasing pressure in recent days to contribute to the global rebuke against Vladimir Putin’s regime and the humanitarian crisis it has wrought in Ukraine.

In a speech to the British Parliament on Tuesday, Ukrainian President Volodymyr Zelensky emphasized the impact of the conflict on Ukrainian civilians, including hospital bombings and children being killed, and appealed to Britain to recognize Russia as a terrorist state.

Canada and its Group of Seven allies have imposed sanctions on Russia, including prohibiting transactions with the Russian central bank. And some have suggested that consumers should boycott companies that do not cut ties with Russia.

On Twitter on Monday, actor Sean Penn urged people to stop buying products from companies such as Pepsi, Coca-Cola and McDonald’s until they suspend their business in Russia – which all three did a day later. The non-profit organization that Mr. Penn founded, Core Response, has been in Poland working on relief efforts for Ukrainian refugees.

In contrast to its fast-food rival, Burger King locations in Russia remain open. Burger King’s Toronto-based parent company, Restaurant Brands International Inc. – which also owns Tim Hortons and Popeyes Louisiana Kitchen – released a statement on Tuesday expressing “horror” at the attack on Ukraine.

Chief corporate officer Duncan Fulton wrote that Burger King’s more than 800 locations in the country are owned and operated by franchisees. “We have long-standing legal agreements that are not easily changeable in the foreseeable future.”

Last week, the master franchisee in that market told Russian state-owned news agency RIA Novosti that the chain plans to expand this year by opening more locations – which the parent company now says will not happen. “We will be withholding all required approvals for expansion,” Mr. Fulton wrote on Tuesday.

Restaurant Brands announced that it would redirect any profits the parent company receives from franchisees in Russia to the United Nations refugee agency, UNHCR.

Chinese brands stay put in Russia for now despite Western exodus

Burger King is not the only fast-food chain still operating in Russia. KFC and Pizza Hut parent company Yum Brands Inc. said on Tuesday that it is also “pausing investment” in Russia and closing some locations, but did not commit to closing all of its restaurants. Like RBI, the company said that it would redirect profits from its Russian operations to humanitarian efforts. On Tuesday the company said it was finalizing an agreement with its master franchisee to close all of its 50 Pizza Huts in the country, and that it would also close all company-owned KFCs – accounting for 70 of the chain’s 1,000 locations in Russia.

A number of Canadian companies have already suspended operations in Russia. Convenience-store giant Alimentation Couche-Tard Inc. announced on Monday that it would wind down its business there. Last week, Toronto-based miner Kinross Gold Corp. suspended operations at its Kupol mine and Udinsk development project; Ski-Doo maker BRP Inc. paused exports to Russia; and outerwear retailer Canada Goose suspended sales there.

In addition, McCain Foods paused construction on a potato-processing facility south of Moscow, and auto-parts manufacturer Magna International idled its Russian plants after its two main customers in the region – Volkswagen and Hyundai – said they would suspend operations in the country.

Ukraine’s leadership has appealed to companies to withdraw from Russia. In an interview with CNN over the weekend, Ukrainian Foreign Minister Dmytro Kuleba criticized companies that continue to do business there.

“This money is soaked with Ukrainian blood.”

With a report from Chris Hannay

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