Starbucks to completely exit Russia after Ukraine invasion

Starbucks to completely exit Russia after Ukraine invasion

Starbucks to completely exit Russia after Ukraine invasion

Starbucks to completely exit Russia after Ukraine invasion

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Starbucks announced Monday that it will cease operations in Russia, closing its 130 cafes in the country in the aftermath of Ukraine’s invasion.

The departure comes just a week after another iconic US brand, McDonald’s, left Russia as part of a wave of Western companies cutting off the country in the aftermath of the attack.

“Starbucks has made the decision to exit and no longer have a brand presence in the market,” the company said.

“We will continue to support the nearly 2,000 green apron partners in Russia, including pay for six months and assistance for partners to transition to new opportunities outside of Starbucks.”

The coffee chain suspended its operations in early March after Russia sent troops across the border into Ukraine in late February.

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Former chief executive Kevin Johnson at the time condemned Russia’s “unprovoked, unjust and horrific attacks on Ukraine.”

Starbucks had a relatively modest operation in Russia compared with McDonald’s, which owned 850 restaurants in the country employing 62,000 workers.

McDonald’s, which had operated in Russia since 1990, said its exit would result in one-time costs of $1.2 billion to $1.4 billion. The fast-food chain on Thursday said it reached a deal to sell the business to Russian investor Alexander Govor, a McDonald’s licensee.

French automaker Renault also left the country last week, handing over its assets in the country to the Russian government.

 

– Pariah –
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Retail analyst Neil Saunders of GlobalData said the actions show “that Russia will become more of a commercial pariah as companies turn their backs on a country that represents things they do not wish to be associated with.”

But he predicted some other brands would probably stay put.

“Some will follow, but other consumer packaged goods and retail firms will likely hold out as, unlike Starbucks and McDonald’s, they have extensive exposure to, and interests in, Russia,” he said. “This includes luxury brands which, before the invasion of Ukraine, made good money from the lucrative market for high-end goods.”

Starbucks opened in Russia in 2007, with operations managed by a Kuwait-based licensing company.

In December 2010, executives highlighted the country as a key emerging market for the brand, along with China, Brazil and India.

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Starbucks did not disclose the financial impact of leaving the country, but Saunders believes the hit to the bottom line will be minor given the company’s limited presence in Russia.

Starbucks stock rose 0.8 percent to $73.96 at midday Monday.

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