UK & World News

  • 4 April 2014, 20:32

McDonald's Closes Restaurants In Crimea

McDonald's has announced the closure of its restaurants in Crimea, prompting fears of a backlash as a prominent Moscow politician called for all the US fast-food chain's outlets in Russia to be shut.

Russia's actions in Crimea, which Ukraine and the West condemn, has worried companies with assets in the Black Sea peninsula as it is unclear how the change may impact their business.

While McDonald's did not mention the political situation in its statement, its decision to leave the region is a further sign of the rift in Western-Russian relations.

The company said simply: "Due to operational reasons beyond our control, McDonald's has taken the decision to temporarily close our three restaurants in Simferopol, Sevastopol and Yalta."

The Crimean outlets are not franchises, but owned and operated by McDonald's itself.

Earlier this week Geneva-based Universal Postal Deutsche Post announced that it was no longer accepting letters bound for Crimea as it could no longer guarantee delivery to the region.

Economic relations between Russia and Ukraine have deteriorated rapidly since Russia annexed Crimea last month in response to the ousting of Russian-backed president Viktor Yanukovych.

Russia raised the price it charges Ukraine for gas on this week - piling pressure on its neighbour as it teeters on the brink of bankruptcy.

Moscow has frequently used energy as a political weapon in dealing with its neighbours, and European customers are now concerned Russia might again cut off deliveries.

Ukraine this week temporarily banned seven Russian food companies from selling some of their products on Ukrainian territory.

McDonald's said it hoped to resume work as soon as possible but said it would help relocate staff to work in mainland Ukraine - a sign it did not expect its Crimean businesses to reopen in the near future.

The company's decision was welcomed by the deputy speaker of the Russian parliament, Vladimir Zhirinovsky, known for his anti-Western rhetoric, who demanded that McDonald's pull its business out of Russia entirely.

"It would be good if they closed here too ... If they disappeared for good. Pepsi-Cola would be next," he said, adding that his party would organise pickets at McDonald's restaurants across the country.

McDonald's, which currently operates more than 400 restaurants in Russia, was the first international fast-food chain to tap the Russian market when it opened in Moscow's Pushkin Square before the collapse of the Soviet Union.

That branch had the highest sales and served the most customers of any McDonald's outlet in 2012.

A Russian backlash against McDonald's products would have a significant impact on company profits.

McDonald's sees Russia as one of its top seven major markets outside the United States and Canada. And many Russian food suppliers could face financial hardship if their biggest market is interrupted long term.

Meanwhile, the Buffalo, New York-based Mighty Taco has banned Mr Putin from all of its 23 locations in western New York.

The Mexican food chain made the announcement on social media, saying the Russian leader will be "welcomed back" at Mighty Taco when he stops acting like a bully and "picking on people".

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