Large international corporations halt certain operations in Ukraine
PepsiCo, Inc., Yum! Brands, Inc., McDonald’s Corp., Starbucks Corp., and Coca-Cola Co. are just a few of the firms that have suspended some of their activities in Russia due to that nation’s invasion of Ukraine.The business would halt capital investments, all advertising in Russia, and the sale of beverages like Pepsi Cola, 7UP, and Mirinda, according to a March 8 email from Ramon Laguarta, CEO of PepsiCo, Inc., Purchase, NY.
Mr. Laguarta wrote, “As a food and beverage company, we must stay true to the humanitarian aspect of our business now more than ever.” This implies that we must keep providing our other goods, such as everyday necessities like milk and other dairy products, infant formula, and infant food, to Russian consumers. We will sustain the livelihoods of our 40,000 Russian agricultural laborers in our supply chain and our 20,000 Russian associates by carrying on with business as usual, despite the enormous obstacles and unpredictabilities they face.
Mr. Laguarta continued, saying that PepsiCo has ceased activities in Ukraine and is attempting to help Ukrainian refugees in other nations by donating to relief organizations and increasing output at other PepsiCo facilities.
The Atlanta-based Coca-Cola Company said in a succinct statement on March 8 that it was “suspending its businesses” in Russia, but it did not elaborate.
According to an email sent on March 8 to staff members and franchisees, CEO Chris Kempczinski said that McDonald’s will be temporarily closing all of its stores in Russia and pausing all of its operations in that region.The day before, Starbucks’ president and CEO, Kevin Johnson, sent a letter to staff informing them that the company was ceasing operations in Russia. There are about 130 outlets for the organization across the nation.
The almost 2,000 Russian partners who rely on Starbucks for their livelihood will receive support, he added, “as our licensed partner has agreed to immediately pause store operations.”
Yum! Brands also responded to Russia’s invasion of Ukraine. The company that owns Taco Bell, Pizza Hut, and KFC has halted all restaurant expansion and investment in Russia.By the end of 2021, McDonald’s had 847 locations in Russia, 84% of which were run by the business. The company operated 108 of the chain’s locations in Ukraine. In 2021, the two nations contributed 2% of McDonald’s total system sales.
Regarding the closure of cafes in Russia, Mr. Kempczinski stated, “We are ready to support all three legs of the stool in Ukraine and Russia because we understand the impact this will have on our Russian colleagues and partners.” “This covers the continuation of pay for all McDonald’s workers in Russia.”
Chicago-based Additionally, McDonald’s supports relief operations by the International Red Cross, has donated $5 million to an employee aid fund, and pays full salaries to its Ukrainian workforce.
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Mr. Kempczinski stated, “We will continue to concentrate on how McDonald’s can help those in need, both now and in the future, throughout the rest of Europe.” “Our colleagues in Russia and Ukraine have already shown outstanding leadership, and I am confident that the rest of the McDonald’s network is prepared to assist the numerous people that this violence has uprooted.
“McDonald’s will keep an eye on the situation going ahead and decide whether to take any more action. It’s hard to say when we might be able to reopen our restaurants in Russia at this point. In addition to other operational effects, our supply chain is being disrupted. We’ll keep a careful eye on the humanitarian situation as well.
Based in Louisville, Kentucky In Russia, Yum! has over 1,000 KFC restaurants and 50 Pizza Hut outlets. Nearly all of the restaurants are operated by independent operators under franchise or license agreements. Yum! is matching employee donations to organizations that are helping people in Ukraine, has activated a disaster relief fund to support its Ukrainian franchise employees, and is giving $1 million to the Red Cross.
According to Ramsey Baghdadi, a consumer researcher for GlobalData, “McDonald’s and other fast-food outlets are under pressure to withdraw from the Russian market,” on March 8. However, for the fast-food industry, this is easier said than done. In 2020, Russia will account for about 0.7% of the value of fast food restaurants worldwide. Given how little value is created in Russia, it is clear that concerns about declining sales are not the primary element at work here.
The sheer nature of foodservice companies’ business models presents a hurdle. Since many of their locations are franchises rather than businesses, fast-food chains like McDonald’s and KFC frequently have intricate agreements with them. Therefore, compared to other industries, it becomes a lot more difficult discussion to entirely suspend operations.
Nonetheless, a March GlobalData consumer poll revealed that consumers were concerned about social reasons.”It becomes difficult for these companies to balance consumer expectations and their operational needs, putting pressure on international fast-food restaurants,” Mr. Baghdadi stated, noting that 72% of consumer purchases are motivated by a brand’s ethics or support displayed toward a social cause.