KFC and Pizza Hut owner and Heineken pause business in Russia

Mothercare and Universal Music also among latest round of firms to halt operations after invasion of Ukraine

The owner of KFC and Pizza Hut, along with Mothercare, Heineken and Universal Music Group, have become the latest companies to pause business in Russia in response to its invasion of Ukraine.

After a number of major western brands, including McDonald’s, Starbucks, Coca-Cola and PepsiCo, bowed to public pressure and suspended operations in Russia, the Kentucky-based Yum! Brands followed suit.

It said it was suspending 70 KFC company-owned restaurants in Russia and finalising an agreement to suspend all 50 Pizza Hut outlets in partnership with its master franchisee.

Yum! has 1,000 KFC restaurants in Russia, most of which are run by franchisees. The company had already suspended all investment and restaurant development in Russia.

Pizza Hut opened its first Russian outlet at the start of the 1990s and the former leader of the Soviet Union Mikhail Gorbachev was featured in one of its television adverts in 1998.

Mikhail Gorbachev featured in a Pizza Hut TV advert in 1998.

Heineken said on Wednesday that it had stopped the production and sale of its own-brand beer in Russia, after previously halting all new investments and exports to the country. The Dutch brewer is taking immediate steps to ringfence its Russian operations from its wider business.

The British babywear chain Mothercare announced that all business in Russia, including shipment of all products, had been suspended. Its local partner has confirmed it will be immediately pausing operations in 120 Mothercare stores and online. Russia accounts for 20-25% of Mothercare’s worldwide retail sales and was previously expected to contribute about £500,000 a month to group profit.

Universal Music Group said it was suspending all operations in Russia and closing its offices in the country “effective immediately”. The Dutch-American group’s move came a day after PRS For Music, the British music copyright collective, said it had suspended with immediate effect its partnership with RAO, the Russian royalty collecting society for musical works.

The musician Sting has added his voice to the growing number of celebrities showing their support for Ukraine, as he posted a video on Instagram of himself singing his 1985 song Russians, saying he “never thought it would be relevant again”. He ended his message by saying: “We, all of us, love our children. Stop the war.”

Also on Wednesday, the UK tobacco firm Imperial Brands, which makes Davidoff and Gauloises cigarettes, announced it had halted production at its factory in Volgograd and ceased all sales and marketing activity but would continue to pay its Russian employees. It has already suspended its operations in Ukraine for the safety of its 600 staff there. Russia and Ukraine accounted for 2% of the firm’s net revenues last year, or £656m.

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McDonald’s is also temporarily suspending operations at its 850 locations in Russia. The company said it would continue to pay its 62,000 Russia-based employees.

The fast-food chain, which owns 84% of its stores in Russia, could take a big financial hit because of the closures because its restaurants in Russia and Ukraine contribute 9% of annual revenues, or about $2bn.

A host of other consumer brands including Netflix, Levi’s, Burberry, Ikea and Unilever, the owner of Marmite and Ben & Jerry’s, have halted business in Russia, while professional services firms including KPMG, PwC, EY and Deloitte have also cut off businesses in the country and its ally Belarus.

Ukraine’s foreign minister, Dmytro Kuleba, told CNN two days ago that “all western companies must withdraw from Russia” on humanitarian grounds.


Julia Kollewe

The GuardianTramp

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