US-based multinational Domino’s Pizza is closing all its branches in Russia, joining the ranks of other Western businesses fully withdrawing from the country following its invasion of Ukraine last year.
DP Eurasia, the entity holding the master franchise for the Domino’s Pizza brand in Russia, announced its intention to initiate bankruptcy proceedings for its Russian subsidiary, DPRussia, as of August 21.
The decision followed an evaluation of Domino’s Pizza’s “presence in Russia, the impact of sanctions and its continuing ability to serve its customers in Russia”, the company said.
“With the increasingly challenging environment, DPRussia’s immediate holding company is now compelled to take this step, which will bring about the termination of the attempted sale process of DPRussia as a going concern and, inevitably, the group’s presence in Russia. A bankruptcy petition of DPRussia will be filed in accordance with the relevant statutory requirements in due course.”
Domino’s Pizza said it was unable to make an exact estimate of the financial impact of insolvency for DPRussia on the consolidated financial position and results of the company. It had become the third-largest pizza delivery company in Russia, with its first restaurant opening in Moscow in 1998.
In March 2022, shortly after Moscow’s invasion of Ukraine in late February, DPRussia halted royalty payments from Russia, despite keeping its 142 outlets operational in the country.
When the conflict erupted, several Western fast-food companies ceased their operations in Russia. McDonald’s closed its 850 restaurants, attributing the decision to the “humanitarian crisis” and the “unpredictable operating environment” brought about by the Ukraine war. The majority of these establishments were acquired by Russian entrepreneur Alexander Govor, who rebranded them as “Vkusno i Tochka”, translating as “Tasty and that’s it”.
The move was well received in Russia, with many seeing the opening of a local restaurant in Moscow as synonymous with the “opening” of Russia after Communism fell. It was also costly for the American company, with McDonald’s exit reportedly costing more than €1 billion.
Yum! Brands, the owner of KFC and Pizza Hut, also withdrew from the Russian market, selling its locations to local businesses already involved in franchising there.
Restaurant Brands International, the parent company of Burger King, maintains its presence in Russia through a joint venture. It has indicated its desire to suspend operations but the Russian operator of its 800 outlets reportedly “declined” to shut them down.
Other major corporations including Coca-Cola, Starbucks and Pepsi have either pulled out of Russia entirely or temporarily halted operations there, while other big brands such as Netflix, Levi’s, Burberry, Chanel and Uniqlo have also taken similar action.
The Yale School of Management has published a list of more than 1,000 companies that have curtailed operations, sometimes going further than required by international sanctions, while others have continued to operate in Russia undeterred.
Ukraine publishes a list of companies, in concert with the list of Yale, to identify and “name and shame” companies that keep working in Russia.
Ukraine’s national anti-corruption agency identifies such businesses as “foreign supporters of the war” because it says they create tax revenue for the Russian Government and their presence shields Russian citizens from the realities of the conflict.
Ukraine’s national anti-corruption agency has added spirit maker Bacardi Limited to its catalogue of “foreign supporters of the war” with Russia. https://t.co/wpH0uBluDi
— Brussels Signal (@brusselssignal) August 11, 2023