McDonald’s was forced to leave Russia and sold all its restaurants to a local licensee?

This case highlights the supply problems faced by many Kazakh companies in the aftermath of Russia’s invasion and subsequent Western sanctions. Kazakhstan is the main trading partner of its neighbor Russia.

The U.S.-based company stated that its Kazakhstan licensee had temporarily closed all its restaurants due to supply problems. We are working together in order to resume operations as soon as possible.
Food Solutions, the Kazakh licensee, announced its closure on Nov. 17, citing “local supply problems.” It didn’t respond to requests for comment.

McDonald’s has grown its 24 restaurant network in Kazakhstan over the past six-years to become a major player in the fast food market.

Some supplies, including chicken and beef, were sourced from abroad by the company. According to the company’s website, this latter came from Russia’s Miratorg.

In May, Russia invaded Ukraine in a so-called “special military operation”. McDonald’s was forced to leave Russia and sold all its restaurants to a local licensee.

Food Solutions, owned by Kairat Boranbayev (a prominent Kazakh businessman), also began looking for suppliers and stopped purchasing Russian products at one point, according to a source close.

Another source claimed that the company ran out of packaging materials also from Russia and had to reduce its menu. The sources weren’t authorized to speak publicly about the matter.

According to the source, the licensee is currently awaiting delivery from other suppliers. The company plans to reopen its restaurants by December. It is not clear from whom the decision to abandon Russian suppliers was made.

Marr Russia, one Kazakh company’s Russian suppliers said that it has never worked directly with McDonald’s. Instead, it deals with HAVI, its Kazakh logistics partner. According to it, sales to Kazakhstan are not affected by this. HAVI declined comment.

Miratorg stated that it was a supplier to Vkusno & Tochka (the Russian successor of McDonald’s), but did not address the question about Kazakh sales.

Food Solutions previously mentioned Cargill Russia as one of its suppliers. It stated that it had sold the business dealing with McDonald’s to Cherkizovo, a Russian meat producer. Cherkizovo did not immediately respond to a request to comment.

Kazakh Deputy Prime Minster Serik Zhumangarin was asked about McDonald’s during a briefing Tuesday. He said that he couldn’t disclose the reason for the temporary closure of the restaurant but added that the government was helping to localize its supplies.

Shivi

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