Business

Starbucks will leave Russia in 15 years, closing 130 licensed cafes

After 15 years of operation in Russia, Starbucks will exit the market, joining companies like McDonald’s, Exxon Mobil and British and American tobacco in withdrawing from the country altogether.

The coffee giant announced Monday that it will no longer have a brand presence in Russia. Starbucks has 130 locations in the country, accounting for less than 1% of the company’s annual revenue. They are all licensed locations, so the Seattle-based company itself doesn’t operate them.

Starbucks says it will pay nearly 2,000 Russian workers for six months and help them transition to new opportunities outside the coffee chain.

A woman drinks coffee in a Starbucks store in the Khimki shopping center, on the outskirts of Moscow.

Alexander Natruskin | Russia

Both consumers and investors are pressuring Western companies like Starbucks to cut ties with Russia in protest. Kremlin’s war with Ukraine, but canceling licensing transactions takes time. Starbucks suspended all business with the country as of 8/3. The suspension includes shipments of all Starbucks products and temporarily closed cafes.

In its latest quarterly results released in early May, the company did not disclose the financial impact of the suspension. Former CEO Kevin Johnson has pledged to donate royalties from Russian business to humanitarian causes.

But it’s certainly a smaller financial blow than the one for McDonald’s, already present in Russia for more than 30 years.

The fast food giant said suspending its operations in Russia and Ukraine cost it $127 million in the first quarter. These two markets account for 9% of the company’s revenue in 2021. The company has about 850 restaurants in Russia, most of which are operated by the company rather than by licensees.

On Thursdays, McDonald’s announced that they will be selling those locations for an undisclosed sum to the Siberian franchisee, who will run them under a new brand.

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