Salem Radio Network News Thursday, July 7, 2022

Business

McDonald’s to sell Russia restaurants to local operator

By Praveen Paramasivam

(Reuters) -McDonald’s Corp is selling its Russia business to its current licensee Alexander Govor and the restaurants would operate under a new brand, ending more than three decades of presence in the country following its invasion of Ukraine.

The world’s largest burger chain owns about 84% of its nearly 850 restaurants in Russia and became one of the biggest global brands to exit the country earlier this week, while saying it would retain its trademark.

Govor, who runs the franchise operation through his firm GiD LLC, has been a McDonald’s licensee since 2015 and had helped the burger chain expand into remote Siberia, where he operates 25 restaurants.

McDonald’s and GiD declined to disclose the financial terms of the deal. The burger chain had said it would take a non-cash charge of up to $1.4 billion following a sale.

The deal with Govor provides for employees to be retained for at least two years on equivalent terms, McDonald’s said on Thursday.

He would pay the salaries of corporate employees in 45 regions of the country until the closure of the sale, which is expected in the coming weeks.

Russia’s Industry and Trade Minister Denis Manturov said the deal was the result of a “long and difficult” negotiation process and the government would provide Govor all the necessary assistance to set up operations.

Earlier in the day, a local media report said one of the U.S. fast food chain’s largest franchisee operators in Russia, SPP, was a potential buyer. Its owner Kairat Boranbayev runs a McDonald’s franchise in Kazakhstan and Belarus.

SPP did not immediately respond to a Reuters request for comment.

McDonald’s had in March decided to close its restaurants in the country, including the iconic Pushkin Square location in central Moscow – a symbol of flourishing American capitalism in the dying embers of the Soviet Union.

Several other Western brands, including Imperial Brands and Shell, have also agreed to sell their Russian assets or hand them over to local managers.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Arun Koyyur)

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