Starbucks shuts stores in Russia, will pay staff for 6 months

After McDonald’s, it is now the American coffeehouse chain that has pulled out of Russia

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Close on the heels of McDonald’s selling its restaurants in Russia to a local licensee, who has begun a rebranding exercise, now Starbucks is exiting Russia. The American chain of coffeehouses has closed its 130 outlets in Russia, a market it had entered about 14 years ago. Employees have been informed that they will continue to get their salaries for the next six month. Starbucks will also help the about 2,000-strong workforce find alternative jobs.

Kevin Johnson, CEO, Starbucks Corp. has assured employees that the Company will remain transparent as it continues to make decisions in line with its mission and values.

The licensed Starbucks outlets in Russia —which account for hardly one per cent of the chain’s global revenue —were run by a Kuwait-based franchise operator group, called Alshaya Group. These outlets, were, therefore, not directly controlled by Starbucks.

Earlier this year, Starbucks had committed to donate all its earnings from the Russian outlets towards relief work and activities in Ukraine.

Starbucks is not the first to close down operations in Russia. Burger King, Yum Brands and Papa John’s, in addition to McDonald’s, have all recently suspended operations in the country. McDonald’s had over 800 outlets in Russia, all of which were directly owned by the Company. Also, McDonald’s had over 60,000 employees working for it in the country. Alexander Govor, an existing licensee is now the owner of the outlets. He will, however, not be allowed to use the McDonald’s brand or name anywhere, not even on the menus.

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