The big fast food brands such as McDonald’s, KFC and Starbucks, among others, face, with the invasion of Russia in Ukraine, a new challenge for their business outside the United States.
McDonald’s, KFC and Starbucks, along with other fast food firms such as Papa John’s, Pizza Hut and Burger King, will have to draw the uncertainty that the Russian military advance generates in international markets, in addition to the effects of the sanctions already announced by the United States government on Russia, and of the additional ones that may come in the next few weeks.
The potential problem for the big American players in fast food is not minor. As a whole about 2,700 restaurants operate on Russian territory, according to a calculation published by Yahoo! Finance.
McDonald’s is the brand that, apparently, would have the biggest challenge to solve. With 1,900 restaurants in Russia, a negative impact on their business in this area of the world could translate into a bigger problem.
The hamburger chain and creator of the famous Big Mac has not had it easy in recent months and has not fully recovered from the blow caused by the Covid pandemic-19, and now he must overcome the consequences of the economic sanctions arising from the Russian-Ukrainian military conflict.
So far this year alone, McDonald’s shares have fallen 8%, according to a report published by Yahoo! Finance; other fast food brands sharing a similar fate are: Restaurant Brands and Yum!, which on average have seen their shares fall by 10%.
The Russian conflict in Ukraine is one more factor of concern for these large fast food chains, which have been dealing for months with the Rise in prices and basic supplies as a result of inflation, the shortage of workers and supply chain problems.
What is the biggest concern of the big fast food chains in Russia
Until now, the international business of the big fast food chains in Russia fast food such as McDonald’s, KFC and Starbucks continue to operate in Russian territory, without there being a visible threat of possible closures of restaurants in retaliation for the measures announced by the White House against the Kremlin.
However, the whirlwind that the Russian military operation unleashed on the markets international markets since Wednesday, executives of the processed food industry with business in Russian territory are concerned.
The greatest concern is focused on allaying investors’ uncertainty in order to maintain stability in their international investments, not only in Russia, but also in other regions of Eastern Europe.
Other measures that would put this industry in complications would be restrictions to carry out operations with suppliers or sellers, as well as the uses of the banking and shipping system of cash to the United States.
For Yum! Brands, owner of the KFC and Pizza Hut brands, pointed out in its recently published results report that the military actions in Ukraine could have a negative impact, in the future, on its operations in Russia and in the region.
“The escalation of tensions between Russia and Ukraine, and any possible incursion Russia’s military in Ukraine, could have an adverse impact on macroeconomic conditions, lead to regional instability and result in further economic sanctions by the US and the international community, in a way that negatively affects us and our Concepts.”, cites the corporate report.
With more than 550 restaurants in Russia, Restaurant Brands, which owns Burger King, is also cautious about the consequences that the conflict could generate for its operations. Their fears focus mainly on the habits of the final consumer.
“The conflict between Russia and Ukraine could have an adverse impact on economic conditions and the demand to go out to dinner, in addition to resulting in greater economic sanctions by the United States and Europe”, cites its annual operations report.
In the case of Papa John’s, with 186 stores in Russia, its CEO, Rob Lynch, took a more cautious stance, ensure that although the fast food business has bad times, it always maintains “some stability”.
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