McDonald's Has Been Left With Millions Of Dollars' Worth Of Russian Food That It Can't Use

McDonald's has revealed how much money the company has lost in food wastage since it closed its restaurants in Russia. 

McDonald's first announced it was temporarily closing all of its restaurants in Russia and would 'pause all operations in the market' on 8 March.

The fast food company made the move in response to Russian President Vladimir Putin sending troops across the border into Ukraine on 24 February, marking the first day of his ongoing 'special military operation'.

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Since last quarter, the fast food company has lost £127 million as a result of the closures of its Russian branches.

The $127 million loss has resulted from the cost of still paying Ukrainian and Russian staff; wages that have totalled $27 million.

The other $100 million is from food and other items that had to be thrown out.

The company stated its performance results for 2022 included: "$127 million, or $0.13 per share, of pre-tax operating expenses incurred to support the Company's businesses in Russia and Ukraine.

"Included in this amount were $27 million related to the continuation of employee salaries, lease and supplier payments as well as $100 million for inventory in the Company's supply chain that likely will be disposed of due to restaurants being temporarily closed."

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The chain decided to close all of its Russian restaurants because of wanting to embody former CEO of McDonald's Fred Turner's philosophy: "Do the right thing."

Explaining how it couldn't 'ignore the needless human suffering unfolding in Ukraine' in an email to employees and franchisees, CEO Chris Kempczinski stated how the decision was made in close consultation with the company's Chairman, Rick Hernandez and the rest of the McDonald's Board of Directors.

It stated: "We understand the impact this will have on our Russian colleagues and partners, which is why we are prepared to support all three legs of the stool in Ukraine and Russia. This includes salary continuation for all McDonald’s employees in Russia."

McDonald's stressed the situation would continue to be assessed and 'additional measures' implicated if 'required'.

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While McDonald's net income was hit by a 28 per cent decrease as a result of the 847 Russian restaurants closing, alongside 108 in Ukraine, sales grew in other countries.

CFO Kevin Ozan noted consumers are 'definitely worried about inflation', particularly in relation to 'energy and gas prices'.

However, the last quarter saw sales at restaurants that have been open at least 13 months rise by 11.8 per cent.

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The prices at McDonald's were raised by 6 per cent last year.

However, Ozan noted how the company is keeping 'a close watch on lower-end consumers just to make sure that we're still providing the right value'.

Kempczinski has stated McDonald's will offer an updated plan at the end of the second quarter.

He explained: "We expect this to be temporary and we certainly don’t take this decision lightly, but for us this is about doing what we think is the right thing to do, both for the global business and for our people locally.

"As we move forward, McDonald’s will continue to assess the situation and determine if any additional measures are required. At this juncture, it’s impossible to predict when we might be able to reopen our restaurants in Russia."

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