• Fri. May 20th, 2022

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McDonald’s and other U.S. brands under pressure to stop doing business in Russia

McDonald’s and other well-known U.S. companies are still raking in the rubles even after Russia invaded Ukraine — and New York state’s pension fund chief is not lovin’ it.

Neither are many other Americans as calls get louder for boycotting other brands still operating in Russia, and hashtags like #BoycottPepsi, #BoycottCocaCola and #BoycottYumBrands are trending on Twitter.

New York state Comptroller Thomas DiNapoli is urging companies to reconsider doing business in Russia because they face “significant and growing legal, compliance, operational, human rights and personnel, and reputational risks.”

“Russia’s unlawful invasion of Ukraine has led to unprecedented sanctions against Russian companies and individuals,” wrote DiNapoli, who oversees the state’s roughly $280 billion pension fund, which also owns shares of the companies.

“While American sanctions already prohibit investments in many Russian companies, I believe it is prudent to freeze purchases in all Russian companies due to the situation’s unpredictability and the likelihood that conditions will deteriorate.”

March 5, 202202:38

In addition to McDonald’s, the other companies DiNapoli addressed on Friday included:

Not on DiNapoli’s mailing list was Coca-Cola, which last week announced it was donating more than $1 million to Red Cross operations to help Ukrainian refugees in Poland and other countries, but made no mention of its extensive business operations in Russia.

“Over the last few days, everybody at Coca-Cola has been following the news from Ukraine with heavy hearts,” the company said in the statement. “Our thoughts are with those affected.”

DiNapoli said Russian President Vladimir Putin’s “unhinged, tyrannical foreign policy” has already resulted in sanctions that have “hobbled Russia’s already weak economic growth.”

“Russia’s currency has plummeted in just days since sanctions have been instituted,” DiNapoli wrote. “We will continue to monitor these changing events. New York stands with the Ukrainian people. We hope for a peaceful resolution.”

McDonald’s and Coca-Cola are among the companies NBC News reached out to for comment and to learn if they plan to suspend operations in Russia while the war in Ukraine is going on. There was no immediate reply.

Other companies like Apple and luxury retailers like Hermès have either paused sales, imposed restrictions or closed stores in Russia in response to the invasion of Ukraine.

So have retailers like H&M and entertainment giants like Disney and Warner Bros., which last week announced it was “pausing the release of its feature film ‘The Batman’ in Russia.”

Starbucks honcho Kevin Johnson said in a letter Friday to the company’s partners that they have 130 shops in Russia but none in Ukraine.

Still, Johnson wrote, Starbucks condemns the “unprovoked, unjust and horrific attacks on Ukraine by Russia.”

“First, we will donate any royalties we receive from our business operations in Russia to humanitarian relief efforts for Ukraine,” Johnson wrote. 

Starbucks has also already contributed $500,000 to the “World Central Kitchen and the Red Cross for humanitarian relief efforts for Ukraine,” Johnson wrote.

McDonald’s opened its first fast-food restaurant in Russia some 32 years ago when it was the Soviet Union and now has 847 eateries in Russia and 108 in Ukraine.

Those restaurants account for 2 percent of McDonald’s sales, about 9 percent of its revenue, and 3 percent of its operating income, according to the company.

But the fast-food chain’s reluctance to speak publicly on the invasion may stem from the fact that just 16 percent of the restaurants in Russia are franchises owned and operated by local Russians and all of the restaurants in Ukraine are run directly by the company.

“In 2014, after Russia was hit with sanctions in response to its Crimea invasion, there was a perceived negative reaction at the country level against American companies, including McDonald’s whose Moscow restaurants it closed for ‘sanitary violations,’” Bank of America securities analyst Sara Senatore wrote in a note to clients Monday that was obtained by CNBC.

Yum Brands, whose chains include KFC, Taco Bell and Pizza Hut, has more than 1,000 restaurants in Russia. “Like so many across the world, we are shocked and saddened by the tragic events unfolding in Ukraine, and we’re focused on the safety of our employees, franchisees and partners in the region,” Yum said in a statement to CNBC.

Unlike McDonald’s, most of Yum Brands’ Russian stores are franchises run by local operators, so the money Yum makes is from licensing fees, and these restaurants account for just 2 percent of the company’s sales.