Russia’s Burger King refuses to shut and 800 restaurants will remain open despite brand’s boycott

Russia has refused to close down their 800 Burger King restaurants despite demands from the company to suspend all trading, owners have said.

The parent company of Burger King, Restaurant Brands International, announced that all operations would end for their franchised outlets in Russia following the Russian invasion of Ukraine, which is now well into its third week.

But the main operator of the business, businessman Alexander Kolobov, who is in a joint partnership with Restaurant Brands and oversees the day-to-day of the 800 restaurants, has ‘refused’ to close down the chain.

President Putin’s continued attacks on war-torn Ukraine has seen international brands sever all business ties with Russia in attempt to suffocate the state’s economy.

Russians have been finding it increasingly difficult to get their hands on Western goods as more sanctions are imposed by governments and corporate companies.

The parent company of Burger King, Restaurant Brands International, announced that all operations would end for their franchised outlets in Russia following the Russian invasion of Ukraine, which is now well into its third week – but the operator of the business has refused (Pictured, a Burger King restaurant in Moscow, Russia)

The fast-food chain joined the Russian market a decade ago, and it trades through a joint-venture Mr Kolobov and investment banking firms in Ukraine, Investment Capital Ukraine, and Russia, VTB Capital.

Restaurant Brands wrote a letter to employees on Thursday, where international president David Shear said: ‘We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia.

‘He has refused to do so.’

VTB Capital, Russia’s second largest bank, was sanctioned by US, UK and other European countries on February 24 onwards, the day the large-scale invasion of Ukraine began.

Like many other western firms, Burger King has tried to suspend their Russian outlets, but they alongside UK retailer Marks and Spencer have not been able to.

This is because of ‘complicated’ legal arrangements within the company’s structure and long-term franchise agreements limits its ability to close the restaurants,

The fast-food chain joined the Russian market a decade ago, and it trades through a joint-venture Mr Kolobov and investment banking firms in Ukraine, Investment Capital Ukraine, and Russia, VTB Capital (file photo)

The fast-food chain joined the Russian market a decade ago, and it trades through a joint-venture Mr Kolobov and investment banking firms in Ukraine, Investment Capital Ukraine, and Russia, VTB Capital (file photo)

Mr Shear continued: ‘I know that many of you have been following the horrifying attacks on Ukraine. There have been a lot of media reports about brands continuing to operate in Russia and internally, we have been working around the clock to do all the right things.

‘These are the actions we have taken to date:

‘The economic sanctions that have been imposed by many countries include VTB Bank and its controlled affiliates, including VTB Capital and I want you to know that we are in full compliance with all applicable sanctions.

‘We have been asked why we can’t unilaterally suspend operations. I want to answer that question directly.

‘When master franchise agreements and joint ventures are formed, there are extensive commitments to long-term investments and accountabilities to grow the business together.

‘There are no legal clauses that allow us to unilaterally change the contract or allow any one of the partners to simply walk away or overturn the entire agreement. No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses.

‘This is exactly why we say it’s a complicated legal process when we are asked why we can’t just unilaterally shut down the business.

‘Any current attempt to enforce our contract would ultimately require the support of Russian authorities on the ground and we know that will not practically happen anytime soon.

McDonald's said it will close its 850 locations in Russia as western companies continue to pull out of the country following Vladimir Putin's devastating invasion in Ukraine that has sparked global outrage (file photo)

McDonald’s said it will close its 850 locations in Russia as western companies continue to pull out of the country following Vladimir Putin’s devastating invasion in Ukraine that has sparked global outrage (file photo)

McDonalds in Moscow was swamped with customers desperate to get one last Big Mac before the American giant shut up shop for all its Russian restaurants last week.  Hundreds of cars were seen queuing in the snow outside the fast food joint, with one witness saying the line stretched for almost 'half a mile' (file photo)

McDonalds in Moscow was swamped with customers desperate to get one last Big Mac before the American giant shut up shop for all its Russian restaurants last week. Hundreds of cars were seen queuing in the snow outside the fast food joint, with one witness saying the line stretched for almost ‘half a mile’ (file photo)

‘This is also why you may see other brands in Russia with similar structures continue to operate in the market.

‘Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today? No.

‘But we want to be transparent with our actions and explain the steps we have taken to stand with the international business community in response to Russia’s attack on Ukraine and its people.’

Restaurant Brands, who owns a minority stake of 15% in the Russian joint venture, is in the process of unwinding their business with Russia.

While this process is ongoing they have stopped supporting the Burger King supply chain, operations, and their marketing in Russia, as well as rejecting new pitches for investment and expansion.

Mr Shear also noted that Restaurant Brands International has donated $ 1million to the United Nations’ Refugee Agency and has distributed another $ 2million in free meal coupons for the Ukrainian refugees who have fled the country.

Earlier this week, the UN reported that a total of three million people fled from Ukraine in the three weeks since the war broke out.

Fellow fast-food chain McDonalds in Moscow was swamped with customers desperate to get one last Big Mac before the American giant shut up shop for all its Russian restaurants last week.

Hundreds of cars were seen queuing in the snow outside the fast food joint, with one witness saying the line stretched for almost ‘half a mile’.

One Russian filled his fridge with McDonald's (pictured) and shared the photograph to discussion website Reddit, showing his fridge jam-packed with at least 50 McDonald's burgers, leaving barely any room for other groceries

One Russian filled his fridge with McDonald’s (pictured) and shared the photograph to discussion website Reddit, showing his fridge jam-packed with at least 50 McDonald’s burgers, leaving barely any room for other groceries

Others were listing McDonalds burgers online for £ 250 after the restaurant said it will close its restaurants across Russia

Others were listing McDonalds burgers online for £ 250 after the restaurant said it will close its restaurants across Russia

The scenes came after McDonald’s said it will close its 850 locations in Russia as western companies continue to pull out of the country following Vladimir Putin’s devastating invasion in Ukraine that has sparked global outrage.

One Russian filled his fridge with McDonald’s while others sold burgers for £ 250 after the restaurant said it will close its restaurants across Russia.

A photograph, shared to discussion website Reddit, showed a desperate person’s fridge jam-packed with at least 50 McDonald’s burgers, leaving barely any room for other groceries.

A caption alongside the picture read: ‘McDonald’s is permanently closing in Russia here is my friend’s stash.’

Reacting to the post, some people said it would be a ‘good business opportunity’ if he tried to sell the burgers, while others jokingly questioned why he was going to the effort to stash McDonald’s food.

One person wrote: ‘So, what you’re saying is, this is a solid long term investment with no risks?’

Starbucks CEO Kevin Johnson also confirmed in a note to global staff that the iconic coffee chain would be closing its 130 locations in Russia and halting all sales, but continuing to pay its 2,000 employees there

Starbucks CEO Kevin Johnson also confirmed in a note to global staff that the iconic coffee chain would be closing its 130 locations in Russia and halting all sales, but continuing to pay its 2,000 employees there

Another said: ‘Could probably leave it on the shelf and it would still be good for months.’

A third penned: ‘If its not for personal consumption, it sure is a good business opportunity to sell stale burgers at a jacked price.’

The company said it would continue paying its 62,000 employees there ‘who have poured their heart and soul into our McDonald’s brand.’

Starbucks CEO Kevin Johnson also confirmed in a note to global staff that the iconic coffee chain would be closing its 130 locations in Russia and halting all sales, but continuing to pay its 2,000 employees there.

All the shuttered cafes are run by licensed owner-operators, rather than by the Seattle-based coffee giant itself.

Pepsi, one of the first Western products that was allowed in the former Soviet Union, will no longer be sold in Russia, said PepsiCo, which will continue the sale of essential items such as baby formula.

Atlanta-based Coca-Cola, which has a huge presence in Russia through a licensed partner that operates 10 bottling plants there, said in a statement that it is suspending all business there.

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