McDonald’s Left Millions of Dollars in Russian Food That It Can’t Use 2022-04-28 08:06:20

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The company announced last month that it would temporarily close its restaurants in Russia due to The country’s invasion of Ukraine. Also closed restaurants in Ukraine. These closings cost McDonald’s $127 million last quarter.

McDonald’s said in March that it would continue to pay the salaries of its 62,000 Russian employees, despite the shutdown of operations in the country. McDonald’s also supports Ukrainian employees, CEO Chris Kempinski added during a call Thursday with analysts: “In both countries, we have continued to pay employees and provide additional support.”

The costs of these employees, plus payments for rent and supplies, cost the company $27 million.

“The results included … $100 million in inventory costs in the company’s supply chain that will likely be eliminated due to the temporary closure of restaurants,” the company said in a statement.

McDonald's said it will likely have to get rid of unused inventory in Russia.

According to an investor document, there were 847 McDonald’s restaurants in Russia at the end of last year. Together with 108 others in Ukraine, they accounted for 9% of the company’s revenue in 2021.

The shutdowns affected McDonald’s net income, which fell 28% in the three months ended March 31.

Elsewhere, McDonald’s sales grew.

Globally, sales at restaurants open for at least 13 months jumped 11.8% in the quarter, driven by international locations. In the US, sales were up 3.5%, thanks in part to higher prices. Last year, McDonald’s raised prices by about 6%.

The company’s marketing of core menu items and growth in its digital business, thanks in part to Rewards ProgramMcDonald’s said, also contributed to the growth of sales in the United States.

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