The popular beverage brand, Starbucks, will close its operations in Russia and shut down 130 of its outlets in the country. McDonald’s had earlier pulled out of the Russian market following the war between Ukraine and Russia. As per a Business Standard report, on Monday 23 May, Starbucks released a memo to its employees stating that the company has decided to shut down its operations in Russia. It will close all the 130 outlets in the country and will no longer operate in the Russian market.
However, the company has promised its employees’ salaries for the next six months to help them until they find new jobs. Starbucks has over 2,000 employees in Russia who will have to look for new jobs after the company’s closure.
McDonald’s decision followed by Starbucks
McDonald’s had recently pulled out of the Russian market, selling all its stores to a local franchisee in Russia. The new outlets will not use McDonald’s menu or name in the market for its products. starbucks initially had no intention of closing down its stores in Russia. When the Russia-Ukraine war progressed in early March, the company announced that it would donate all the profits to humanitarian relief efforts in Ukraine.
However, Starbucks reversed its decision after seeing several other popular brands like PepsiCo, Coca-Cola, and McDonald’s temporarily pulling out of the Russian market. The company also decided to halt its operations in Russia temporarily.
Starbucks announces closing
Last week, the Seattle-based company released a memo to its employees announcing that it was closing down operations in the country altogether. To help them cope with the situation, all 2,000 employees will continue to get their paycheques for the next six months.according to Business Standard, the CEO of Starbucks, Kevin Johnson, wrote in the memo that the company will continue to follow its mission and values in the dynamic situation and will communicate with transparency about all its decisions.
Starbucks has operated in the Russian market for over 15 years. It will have to leave behind the legacy it established in the country over the years.
Reasons behind this major decision by top brands
As the war progresses between Russia and Ukraine, there is constant pressure on popular brands to cease operations in the Russian market. Calls for boycotts of the company for continuing their operations in the country have led them to make this major decision. Obtaining sanctions from Western governments to continue operations in Russia has become more difficult with the war, which is another reason for leaving the country. Many companies shut operations in increments, and now they have completely pulled out of the Russian market.
The decision made by top brands is a major blow to the Russian economy and thousands of people who will now have to look for new jobs in a dire situation. It will also affect the brands in the long run as they have to pull out of the country where they have a significant presence in the market.