McDonald's was the first major restaurant chain to pull out of Russia and it shows the burger giant is still leading the fast-food world
McDonald's, Starbucks, and other chains have recently announced they are temporarily closing restaurants in Russia.
- McDonald's made the first call in
fast foodand says it could lose out on $50 million a month.
Some of the world's biggest fast-food companies announced plans to suspend operations in Russia on March 8 following continued Russian attacks on Ukraine. McDonald's CEO Chris Kempczinski told workers and customers in a letter on Tuesday, and Starbucks, Papa John's, Yum Brands, and Burger King followed soon after.
While each company had to consider its own financial situation, McDonald's was the first major voice in the industry to take a stand. The giant burger chain occupies a "pre-eminent place" in fast food, essentially paving the way for every other chain to follow its lead, president and CEO of Kalinowski Equity Research Mark Kalinowski told Insider.
McDonald's "made the decision for other companies that much easier," he told Insider. McDonald's has nearly 850 locations in Russia, and combined Russian and Ukrainian locations make up about 9% of revenue and 3% of operating income, the company said. CFO Kevin Ozan told CNBC that the closures will cost McDonald's about $50 million a month.
Once McDonald's made a public decision, fast food competitors could make their own calculations.
"If McDonald's is going to take a hit on operating profits for a while" on its relatively large Russian presence, other chains whose bottom lines would be less impacted can make that decision with less risk, Kalinowski said. "From a PR perspective, it makes sense," he told Insider.
The industry's in-step response to following McDonald's lead shows that for all the changes in fast food in recent decades, McDonald's is still the biggest decision-maker. Other chains tend to defer to McDonald's, Kalinowski said.
McDonald's is often the first chain to make moves that are eventually adopted by others in the industry. McDonald's was largely responsible for making the drive-thru popular and widespread after launching its first versions in the 1970s. Burger King adopted the drive-thru soon after, and Starbucks added them in the 1990s.
In the following decades, drive-thrus became crucial to fast food. Before the pandemic, drive-thrus made up 70% of McDonald's orders and jumped up to over 90% after the onset of COVID-19, and drive-thrus have become key to Starbucks' business too.
McDonald's isn't always the very first chain to adopt advances in fast food, but it often does them at a scale that changes the whole landscape and leads to further adoption by other chains. McDonald's added double drive-thru lanes to hundreds of locations across the US, and they've since become the norm in the industry. It followed the same pattern with ordering kiosks with touch screens located in restaurants, which are now ubiquitous across fast food.
Major brands like Starbucks and
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