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McDonald’s, icon of post-Soviet era, to close all restaurants in Russia

© Reuters. FILE PHOTO: People enter a McDonald’s restaurant in Moscow, Russia April 24, 2018. REUTERS/Tatyana Makeyeva/File Photo

By Hilary Russ

NEW YORK (Reuters) -McDonald’s Corp said on Tuesday it would temporarily close all 847 of its restaurants in Russia, increasing pressure on other global brands to pause operations in the country following Moscow’s invasion of Ukraine.

The closure of the McDonald’s (NYSE:MCD) restaurants will also carry symbolic importance in Russia, where the first location to open, in central Moscow in 1990, became an iconic symbol of flourishing American capitalism as the Soviet Union fell.

McDonald’s said it would continue to pay salaries to its 62,000 employees in Russia. Because of its large size and global reach, the chain is often copied by other companies if it takes a stance on an issue or makes a major operational change.

“If they decide to do something, then probably others will follow,” said international franchise consultant William Edwards of companies’ conversations about whether to pull out of Russia on moral grounds.

Major global brands, including McDonald’s and PepsiCo (NASDAQ:PEP) Inc, have been pressured to pause their operations in Russia by several bodies, including New York state’s pension fund.

Russia calls its actions in Ukraine a “special operation.”

McDonald’s opened in Pushkin Square (NYSE:SQ) 32 years ago as the Soviet Union was collapsing. That new restaurant represented the thawing Cold War tensions at a time when some young Russians were desperate to get their hands on blue jeans and other Americana.

“It’s impossible to predict when we might be able to reopen our restaurants in Russia,” McDonald’s CEO, Chris Kempczinski, said in a note emailed companywide on Tuesday and posted on the company’s website. “We are experiencing disruptions to our supply chain along with other operational impacts. We will also closely monitor the humanitarian situation.”

Of its nearly 850 Russian locations, 84% are owned by the company and the rest are run mostly by one Moscow-based franchisee, Rosinter Restaurants Holding.

McDonald’s, icon of post-Soviet Russia, to close all restaurants in Russia

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