Photograph: Shutterstock
KFC owner Yum Brands on Tuesday said it would pause development in Russia and redirect profits from the country toward humanitarian efforts as it assesses its options in the country.
The move makes the Louisville, Ky.-based company the first restaurant chain to take such steps in the aftermath of the Ukraine invasion. It also comes as pressure has mounted to convince global fast-food chains to close up shop in Russia.
Much of this pressure is directed at McDonald’s, which operates 847 restaurants in the country. The company owns 84% of those restaurants. Yet the Chicago-based burger giant has been unusually quiet on the topic. Company representatives have not responded to requests for comment.
Some of the company’s critics have not been quiet. “It’s shameful that McDonald’s is putting profits ahead of taking a stand for democracy in Ukraine and around the world,” Kiara Sotelo, a Chicago McDonald’s worker and a leader with the Fight for $15 and a Union movement, said in a statement sent by the organization. Fight for $15 is a union-backed movement that has targeted McDonald’s for years in its push to unionize the fast-food sector.
Jeffrey Sonnenfeld, senior associate dean for leadership studies with the Yale School of Management, included McDonald’s, Starbucks and Yum Brands among a list of companies that have “significant exposure” to Russia. That list also features numerous companies that have curtailed their Russian operations.
The issue highlights some of the complexities restaurant chains face when dealing with Russia. With some 144 million people, Russia has been a major source of growth for a U.S. fast-food industry intent on making its presence known around the globe. McDonald’s and KFC in particular have had success there. KFC operates more than 1,000 locations in the country. Russia and other Central and Eastern European nations account for 8% of KFC system sales.
Yet the Russian invasion of Ukraine has led many Western nations to impose harsh sanctions on the country. The Biden administration said this week it would cease importing Russian oil, which helped send gas prices to record levels. Yet there is also pressure on U.S. companies, fueled by social media, to stop doing business in Russia, and hundreds have done so, according to Sonnenfeld.
The iPhone maker Apple, for instance, said it would close its Apple Stores in Russia. Shell Oil said Tuesday it would stop buying Russian oil and gas and that it would cease operations there.
Franchise brands, however, have a more limited ability to take that step because the brands do not technically own the restaurants.
KFC and Pizza Hut, also owned by Yum, are primarily franchise-owned in Russia. Yum said in a statement that it was assessing its options in the country. “Yum Brands has suspended all investment and restaurant development in Russia while we continue to assess additional options,” the company said. “Yum will also redirect profits from operations in Russia to humanitarian efforts.”
The company plans to donate $1 million to the Red Cross and said it is activating the Yum Disaster Relief Fund to support employees of franchises in Ukraine. It is also matching donations by employees to various charities that are assisting refugees.
Starbucks, meanwhile, has 130 licensed locations in Russia. CEO Kevin Johnson said late last week that the company would donate royalties from those operations to relief efforts in Ukraine. The Starbucks Foundation has also donated $500,000 to World Central Kitchen and the Red Cross. Its European and Asian market is also working to support those in need.
“As this dynamic situation continues to unfold, we will listen and take additional steps to support all our partners and communities,” Johnson said in a letter. “We will let you know as we have more to share.”
They aren’t the only restaurant chains with operations in Russia, however. The sandwich giant Subway operates about 450 locations there. A spokesperson for the chain did not respond to a request for comment.
As for McDonald’s, its situation is different. It is mostly company-run in both Russia and Ukraine—where it operates more than 100 locations.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.