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Meanwhile, the conflict’s future was getting murkier. and European Union sanctions, many of which had been hastily written and were far from clear. He spoke often with CFO Kevin Ozan, in part because “we were looking at potentially having to do some significant write-offs,” and with general counsel Desiree Ralls–Morrison about the meaning of U.S. The board and Kempczinski spoke several times a week. Kempczinski was in “hourly contact” with Borden, who had firsthand experience, having worked for the company in Russia and Ukraine. Internal discussions were growing intense. McDonald’s failure to quickly exit Russia led one critic to publicly blast the company as “a screaming anomaly that’s bewildering to all its peers.” “That actually proved to be very helpful, to try to build a bigger picture of what exactly is going on.”
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He won’t name the CEOs, but he says they would call one another frequently, comparing notes, sharing information, assessing where the situation was going, figuring out how to navigate through it. “There were a lot of calls happening between multinationals,” he says. Other CEOs were an important resource for Kempczinski as he tried to answer hard questions. Within a week, Apple, British Petroleum, Ikea, Meta Platforms (Facebook’s parent), Netflix, Nike, Shell, Volkswagen, and others had announced they would halt production, stop sales, close stores, or take other significant action. Formula 1 racing canceled its Russian Grand Prix, and the Union of European Football Associations moved its Champions League soccer final from St. Petersburg to Paris.
On the first day after the invasion, Delta Air Lines announced it was suspending its alliance with Aeroflot. Other organizations were moving fast, and McDonald’s wasn’t. The company says it is continuing to pay all Ukrainian employees. No employees had been killed in the early days, but clearly no place was safe. Having just come through COVID, the company knew “how to lock down a whole market very quickly,” Kempczinski says. Now he faced another one.įirst, he and his team extended the shutdown of the Ukrainian restaurants until further notice.
Four months later the pandemic hit, and he managed the company successfully through an unprecedented crisis. He advanced quickly to heading -McDonald’s USA, the company’s largest market, and became CEO in 2019. Instead, he had risen through several of America’s elite educational and corporate management academies-Duke University, Procter & Gamble, Harvard Business School, Boston Consulting Group, PepsiCo, Kraft Foods-before joining McDonald’s in 2015. Unlike all previous McDonald’s CEOs since founder Ray Kroc, Kempczinski didn’t come up through the company. A decision to leave would signal that the West was retreating and the country reversing course, turning inward again. With Communism crumbling and glasnost ascending, the Golden Arches’ arrival in Moscow heralded Russia’s opening to the outside world as it welcomed even this vigorously capitalist, exuberantly American institution. The opening of the first Russian McDonald’s restaurant in 1990 had been a global news event. Most broadly, the decision would be deeply symbolic. The saga sparked an internal debate over McDonald’s culture and values, and the company’s workforce would surely scrutinize Kempczinski’s choice through that lens. The fact that the company was recovering from an embarrassing scandal involving its former CEO, who was ousted for having an inappropriate relationship with an employee, added to the pressure. More broadly, Kempczinski knew his decision could strengthen or injure McDonald’s brand and reputation. Russia contributed 7% of global revenue last year, a significant sum as sales continue to climb from a pandemic low. It would also impact the company’s finances. Most immediately, a stay-or-go call would affect the company’s 62,000 employees in Russia nearly all the Russian restaurants were company-owned, not franchised, so most of those employees worked directly for McDonald’s. He knew that whatever his decision, the repercussions would be immense.