McDonald's estimates Russia operation suspension will cost $50M per month

McDonald's has a total of 847 locations in Russia

McDonald's estimates that it will cost around $50 million per month, or about 5 to 6 cents per share, to temporarily suspend its operations and close its restaurants in Russia.

Ticker Security Last Change Change %
MCD MCDONALD'S CORP. 251.46 -0.83 -0.33%

A McDonald's restaurant in Moscow, Russia, in April 2018.  (REUTERS/Tatyana Makeyeva/File Photo)

The decision, which was made on Tuesday in response to Russia's ongoing invasion of Ukraine, came after calls for a boycott against the company and other brands with Russian operations gained steam on social media over the weekend

New York State's Common Retirement Fund, one of the largest public pension funds in the U.S., also warned the company in a letter that they would face "significant and growing legal, compliance, operational, human rights and personnel, and reputational risks" for continued operations in Russia.  

MCDONALD'S PAUSING RUSSIA OPERATIONS, TEMPORARILY CLOSING RESTAURANTS

McDonald's CFO Ken Ozan emphasized to the UBS Global Consumer and Retail Conference on Wednesday that the fast-food giant is still calculating the overall impact, which will include paying for its leased locations, the salaries of its approximately 62,000 employees in Russia, related supply-chain costs and other expenses.

McDonald's owns approximately 84% of its 847 Russia locations and 100% of its 108 Ukraine locations. Russia and Ukraine combined represented approximately 2% of the company's systemwide sales, roughly 9% of its revenue and less than 3% of its operating income in 2021. In the fourth quarter of 2021, McDonald's reported total net income of $1.64 billion, or $2.18 per share, and total revenue of $6.01 billion. 

"We expect this to be temporary. And we certainly don't take this decision lightly," Ozan added. "But for us, this is about doing what we believe is the right thing to do both for our global business and for our local people. So, we will continue to assess the situation and hopefully can keep people updated as things progress."

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Other companies that suspended Russian operations on Tuesday include Starbucks, Coca-Cola, PepsiCo, YUM! Brands and Papa John's. 

Ticker Security Last Change Change %
SBUX STARBUCKS CORP. 78.86 -0.66 -0.83%
KO THE COCA-COLA CO. 63.41 +0.13 +0.21%
PEP PEPSICO INC. 170.70 +1.69 +1.00%
YUM YUM! BRANDS INC. 116.83 -0.50 -0.43%
PZZA PAPA JOHN'S INTERNATIONAL INC. 85.16 -0.31 -0.36%

Shares of McDonald's have fallen about 16% year-to-date.