Burger King’s Russian franchise owner refuses to close stores in the country
Burger King’s Russian franchise owner has refused to close 800 stores in the country, despite pressure after the invasion of Ukraine.
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The President of Burger King has said the Russian franchise owner has “refused” to close its 800 stores in the country, despite pressure to suspend operations after the invasion of Ukraine.
The fast food chain owned by Restaurant Brands International (RBI), partnered with Russian businessman Alexander Kolobov.
According to CNN Business, RBI controls just 15 per cent of its Russian Burger King business, and Kolobov is responsible for the “day-to-day operations and oversight” of its locations in the country.
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“We started the process to dispose [of] our ownership stake in the business,” President of RBI’s international operations David Shear said in an open letter to employees.
“While we would like to do this immediately, it is clear that it will take some time to do so based on the terms of our existing joint venture agreement.
“We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia.
“He has refused to do so. Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today? No.”
Burger King entered the Russian market ten years ago through a joint venture with Kolobov, Investment Capital Ukraine and VTB Capital, Russia’s second-largest bank which has been hit with sanctions.
Shear said in his statement that “complicated legal process” is stopping it from shutting down the business.
“There are no legal clauses that allow us to unilaterally change the contract or allow any one of the partners to simply walk away or overturn the entire agreement,” Shear explained. .
“No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses.”
Burger King has suspended all corporate support for the Russian market, including operations, marketing, and supply chain assistance.
The news comes as McDonald’s, Coca-Cola and Starbucks have suspended their operations in Russia following the invasion of Ukraine.
“We cannot ignore the needless human suffering unfolding in Ukraine,” the fast-food giant said, announcing the temporary closure of all 850 restaurants in Russia, where it employs 62,000 people.
PepsiCo announced their own decisions to halt or restrict business in quick succession, noting the growing human cost of the invasion.
The soft drink company said that despite halting sales in Russia of its flagship beverage, as well as 7Up and Mirinda, it would continue to offer products like milk and baby food.
“By continuing to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain,” PepsiCo CEO Ramon Laguarta said in a statement.
– With AFP
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Originally published as Burger King’s Russian franchise owner refuses to close stores in the country