After 15 years of operating in Russia, Starbucks will exit the market, joining companies likeMcDonald’s,Exxon MobilandBritish American Tobaccoin withdrawing from the country completely.
The coffee giant announced Monday that it will no longer have a brand presence in Russia. Starbucks has 130 locations in the country, which account for less than one percent of the company’s annual revenue. They are all licensed locations, so the Seattle-based company itself doesn’t operate them.
Starbucks said it will pay its nearly 2,000 Russian workers for six months and help them transition to new opportunities outside of the coffee chain.
Both consumers and investors pressured Western companies like Starbucks to cut ties with Russia to show opposition to the Kremlin’s war with Ukraine, but unwinding licensing deals takes time. Starbuckshas suspended all business activity with the country since March 8. The pause included shipping all Starbucks products and temporarily shuttering cafes.
In its latest quarterly results released in early May, the company did not disclose the financial impact of the suspension of business operations. Former CEO Kevin Johnson had pledged to donate royalties from the Russian business to humanitarian causes.
But it was surely a smaller financial blow than that dealt to McDonald’s, which has been in Russiafor over 30 years.
The fast-food giant said the suspension of its sizable Russian and Ukrainian operations cost it $127 million in its first quarter. The two markets accounted for 9% of its revenue in 2021. The company had roughly 850 restaurants in Russia, most of which were operated by the company instead of licensees.
On Thursday, McDonald’sannounced it would be selling those locationsfor an undisclosed sum to a Siberian franchisee, who will run them under a new brand.
Amelia Lucas, CNBC
