Amazon halts product shipments to Russia and cuts off Prime Video access: McDonald’s reveals it will cost $50M per month to shut down its 847 restaurants but continue paying staff
- Amazon became the latest company to cut ties with Russia on Wednesday
- Retailer says it won’t ship products to Russia and is cutting off Prime Video
- Russia was not a major market for Amazon, so the move is largely symbolic
- Meanwhile, McDonald’s revealed the cost involved in its Russia shutdown
- Fast-food chain expects to lose $50 million per month during the shutdown
- McDonald’s will continue to pay all of its 62,000 staff and pay leases
Amazon has become the latest Western company to halt operations in Russia over the invasion of Ukraine, suspending product shipments and cutting off access to Prime Video.
Russia was not a major market for the online retail giant, making Wednesday’s announcement largely symbolic, but it adds to the flood of iconic US companies cutting ties, including McDonald’s, Coca-Cola and Pepsi.
‘We’ve suspended shipment of retail products to customers based in Russia and Belarus,’ Amazon said in a statement.
‘We are also suspending access to Prime Video for customers based in Russia, and we will no longer be taking orders for New World, which is the only video game we sell directly in Russia,’ the company added.
Amazon has become the latest Western company to halt operations in Russia, suspending product shipments and cutting off access to Prime Video
A person enters a McDonald’s restaurant in Moscow, Russia on Wednesday. McDonald’s says it expects to lose $50 million per month by pausing operations in Russia
Amazon does not operate dedicated online stores for Russia, but shoppers there can get products shipped from Amazon’s outpost in German.
The company’s cloud computing arm, Amazon Web Services also suspended all sales in Russia.
Amazon said that it has no data centers, infrastructure, or offices in Russia, and reaffirmed that it has a long-standing policy of not doing business with the Russian government.
Meanwhile, McDonald’s said on Wednesday that the temporary closure of its 847 stores in Russia will cost the fast-food chain about $50 million a month.
A cascade of major American brands, including Starbucks, PepsiCo, Coca-Cola Co, and KFC said on Tuesday that they would cease some or all business in Russia following Moscow’s invasion of Ukraine.
McDonald’s, an icon of the post-Soviet era, runs 84 percent of its Russian locations itself and said it will continue paying all of its 62,000 staff and restaurant employees there.
People walk past a McDonald’s restaurant in the main street in Moscow, Russia, Wednesday
Other costs will come from sites it leases and supply chain operations, Chief Financial Officer Kevin Ozan said during a UBS conference on Wednesday.
‘This is a really challenging and complex situation for a global company like us,’ he said.
Seven other fast-food brands with more than 2,600 outlets combined in Russia could also take a financial hit from any decisions to pull out, even though nearly all of those restaurants are owned and operated by independent franchisees.
Papa John’s said in a regulatory disclosure on Wednesday that it could end up having to absorb the cost of $15.2 million of receivables associated with its master franchisee in Russia, which runs all of its 188 restaurants there.
Royalties from the franchisee made up less than 1 percent of Papa Johns total revenue in 2021, the company said.
The pizza chain also said Wednesday that it ceased all operational, marketing and business support to – and engagement with – the Russian market, and that it is not receiving any royalties from restaurants there.
Its Russia franchisee owns and operates its own supply chain.
The owner of KFC is the latest company to pause business in Russia in response to the country’s invasion of Ukraine
Yum Brands Inc, Kentucky-based parent company of the fried chicken chain, said Wednesday that it was was suspending operations of 70 of its at least 1,000 KFC restaurants in the country.
Most of the KFC locations in Russia are owned by franchise and license partners, which may complicate efforts to shutter the operations.
The company, which also owns Pizza Hut, also said it was finalizing an agreement to suspend operations of all 50 of the pizza chain’s Russian locations.
‘Yum! Brands is suspending operations of KFC company-owned restaurants in Russia and finalizing an agreement to suspend all Pizza Hut restaurant operations in Russia, in partnership with its master franchisee,’ the company said.
The company added that it would donate all profits from operations in Russia to humanitarian efforts.
Major US business to pull out of Russia
Amazon: Suspended shipments and Prime Video but had no physical presence.
Apple: Suspended all product sales but had no retail locations.
Coca-Cola: All business in Russia suspended. Operated 10 bottling plants through a licensed partner.
KFC: Parent company Yum Brands is suspending operations of 70 of its at least 1,000 KFC restaurants in the country.
McDonald’s: Operations suspended at all 847 locations in Russia. McDonald’s will continue to pay 62,000 workers there.
Microsoft: All sales of new products suspended in Russia.
Netflix: Service suspended in Russia.
Papa John’s: All corporate operations suspended, but 188 franchisee-owned locations will continue to operate independently without corporate support.
PepsiCo: Suspended sales of Pepsi and other sodas but will continue to sell essential items such as baby formula. Operates two bottling plants in Russia and employs 20,000 workers there.
Pizza Hut: Yum Brands is finalizing an agreement to suspend operations of all 50 of its Pizza Hut locations in Russia.
Starbucks: Suspending operations at all 130 Russian locations. Will continue to pay 2,000 workers during the shutdown.
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