Fast food restaurant chain McDonald’s Corp. (NYSE: MCD) is among the latest western companies to suspend operations in Russia, a report published by The Guardian said. The other brands that joined the corporate exodus include Starbucks (NASDAQ: SBUX), Coca-Cola (NYSE: KO) and Pepsi (NASDAQ: PEP) as the Russia-Ukraine war enters day 14.
McDonald’s, which owns 84% of its stores in the transcontinental country, has stopped operating its outlets at 850 locations. Russia and Ukraine account for 9% of the company’s annual revenues.
The Chicago-based company opened its first store in Russia on January 31, 1990, at Moscow’s Pushkin Square.
In a blog, McDonald’s CEO, Chris Kempczinski, said, “The conflict in Ukraine and the humanitarian crisis in Europe has caused unspeakable suffering to innocent people. As a system, we join the world in condemning aggression and violence and praying for peace.”
Stephens analyst James Rutherford said that according to reports, the burger company plans to continue paying its Ukrainian and Russian employees even after shutting stores.
“The decision to forego sales and continue paying staff could temporarily cause a more pronounced impact on operating income than the 3% operating income mix would suggest,” he added.
Starbucks
Seattle-based coffee shop chain Starbucks has suspended all operations in Russia, which include cafes run by a licensee and shipment of products, CNBC reported.
According to Bank of America Securities, the company has 130 outlets in Russia and Ukraine, all of which are licensed.
Cowen & Co. analyst Andrew Charles said these outlets make up less than 1% of Starbucks’ annual global revenue.
Kevin Johnson, the CEO of Starbucks, said that the company will support its around 2,000 Russian employees.
Coca-Cola & Pepsi
Additionally, beverage companies Coca-Cola and Pepsi have halted the sale of their products in Russia.
According to Reuters, Ukraine and Russia accounted for around 1% to 2% of Coca-Cola’s operating revenues last year.
Meanwhile, Pepsi has also suspended all its advertising activities and capital investments in Russia but will offer daily essentials like dairy products, baby food and baby formula.
The New York-based company said that it will support its “20,000 Russian associates and the 40,000 Russian agricultural workers” in its supply chain.
Consensus Rating on McDonald’s
Overall, McDonald’s has a Strong Buy consensus rating based on 21 Buys and 3 Holds. The average MCD price target of $286.95 implies 28.8% upside potential. Shares have lost 16.6% year-to-date.
Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into McDonald’s performance.
According to the tool, compared to the previous year, McDonald’s website traffic registered a 15.8% decline in global visits year-to-date.
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