Crimea's annexation by Russia, which Ukraine and the West do not
acknowledge, 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 likely to be seen as
emblematic of the rift in Western-Russian relations, now at their
lowest ebb since the end of the Cold War.
"Due to operational reasons beyond our control, McDonald's has taken
the decision to temporarily close our three restaurants in
Simferopol, Sevastopol and Yalta," a spokeswoman said.
The Crimean outlets are not franchises, but owned and operated by
The closures follow Geneva-based Universal Postal Deutsche Post's <DPWGn.DE>
announcement that it was no longer accepting letters bound for
Crimea as delivery to the region was no longer guaranteed.
Economic relations between Russia and Ukraine have worsened since
Russia annexed Crimea last month in response to the ousting of
Russian-backed president Viktor Yanukovich after months of street
protests in Kiev.
Targeted sanctions imposed on a number of prominent Russians by the
United States and the European Union have alarmed some foreign
Russia raised the price it charges Ukraine for gas on Thursday for
the second time this week, almost doubling it in three days and
piling pressure on its neighbor as it teeters on the brink of
Moscow has frequently used energy as a political weapon in dealing
with its neighbors, and European customers are now concerned Russia
might again cut off deliveries.
Moscow is applying economic pressure in other areas, while Ukraine
Russian riot police last month took control of a factory belonging
to a Ukrainian confectionery magnate in the city of Lipetsk as part
of an investigation into the company's affairs, the Ukrainian
government has said.
Petro Poroshenko, a billionaire oligarch known as the "Chocolate
King", is the front-runner in Ukraine's presidential election, which
is set for May 25.
Ukraine this week temporarily banned seven Russian food companies
from selling some of their products on Ukrainian territory.
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McDonald's <MCD.N> said it hoped to resume work as soon as possible
but said it would help relocate staff to work in mainland Ukraine,
signaling it did not expect its Crimean businesses to reopen in the
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
"It would be good if they closed here too ... if they disappeared
for good. Pepsi-Cola would be next," Russian media quoted
Zhirinovsky as saying. <PEP.N>
Zhirinovsky, whose nationalist Liberal Democratic party largely
backs President Vladimir Putin in parliament, said the party would
organize 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 again 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,
according to its 2013 annual report.
However Russian moves to shun McDonald's burgers could easily
backfire, according to Russian newswire RBK, which detailed Russian
food suppliers to McDonald's that would suffer as a result.
(Reporting by Natalia Zinets, Alessandra Prentice;
reporting by Elizabeth Piper; editing by Giles Elgood)
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