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McDonald’s declines to comment on war, has exposure in Russia


Moscow McDonald’s.

Andrey Rudakov | Bloomberg | Getty Images

U.S. fast-food restaurants have little exposure to Russia, Ukraine. McDonald’sA new Bank of America Securities report shows that the Bank of America Securities survey finds that this sector is most under pressure.

McDonald’s Russia has silenced its employees about the Russian invasion. CNBC did not get any comment from the company on Monday.

Other restaurant companies have avoided greater exposure to Russia and Ukraine because most — or all — of their locations in the countries are operated by franchisees. These restaurants may generate less revenue than the franchisor but it does not mean that any significant economic downturns in one country will have a negative impact on the overall company’s results. The franchisor as well as the franchised restaurants are able to point out their local ownership even though they may be based outside the United States. This allows them both to avoid any backlash from the government or consumers.

McDonald’s opened its 32nd Soviet Union location. Since then, it has expanded its presence in Russia and Ukraine by more than 600 locations. They account for approximately 2% of McDonald’s system-wide sales.

Since the Kremlin invasion of Crimea, Chicago’s company has seen its ownership drop from 100% to around 84%.

In a Monday note, Sara Senatore, a Bank of America Securities analyst, wrote that Russia had been hit with sanctions as a result of its Crimea invasion.

The rest of McDonald’s Russian territory is managed by franchisees.

Senatore believes that the bigger threat for McDonald’s is if the conflict spills into Europe. Nearly a quarter (25%) of McDonald’s worldwide sales are from the continent. Senatore predicts that about a third could be generated by the region’s operating profits.

StarbucksSenatore reports that generating about 5% from Europe is the case for. Russia remains the largest coffee company, and all its franchisees manage their cafes. Kevin Johnson is the CEO condemned the Russian attackUkraine, and pledged to give royalties from Russia to aid Ukrainian humanitarian causes.

Yum BrandsThe Russian branch of Yum, which includes Taco Bell and KFC, accounts for about 2% in its total system sales. Yum’s revenue from licensing fees, however, is significantly lower because the vast majority are franchised.

Yum stated in a statement that she and her team were shocked by what was happening in Ukraine. Yum also said, “Like many people around the globe, we are saddened and disturbed.” Yum spoke to CNBC.

It said it wasn’t too early to talk about the effects, but that the company is closely watching the situation. The company’s foundation will donate $1 million to Red Cross, and employees will match donations made to various charitable relief organisations.

Domino’s PizzaBurger King Owner Restaurant Brands InternationalSenatore reports that restaurants are also available in Russia and Ukraine. However, all locations are run by franchisees.