Dive Brief:
- Starbucks will leave Russia, where it has 130 licensed locations, the company said Monday. The chain has had stores in the country for 15 years.
- The chain said it would pay nearly 2,000 Russian workers for six months and help them find new jobs.
- In early March, Starbucks and its licensed partner agreed to suspend operations, including the shipment of all its products into the country.
Dive Insight:
Starbucks is the latest major chain to pull out of Russia entirely suspending operations in the wake of invasion of Ukraine. McDonald’s said last week that it would sell its franchised business to licensee Alexander Gover, who will operate the units under a different brand.
For McDonald's, the exit will prove costly — the brand expects to lose between $1.2 billion and $1.4 billion. The exit for Starbucks, however, is unlikely to as hard. Its business in Russia makes up less than 1% of its revenue.
Starbucks previously said it would donate royalties from its Russia business to humanitarian relief efforts for Ukraine and contributed $500,000 to World Central Kitchen and the Red Cross.
Revenue from globally licensed stores also pales in comparison to Starbucks’ company-operated stores, which made up nearly $6.3 billion in net revenue during the quarter ending April 3, 2022, according to an earnings release. Its international licensed stores generated $342.5 million in revenue, but increased revenue by 51% compared to the previous year’s quarter ending March 28, 2021. International company-owned stores declined revenue by 3.2% comparably.
While the impact to Starbucks will be minimal, it shows a growing desire among global chains to exit from a region that was once seen as having significant growth potential.
Other chains to suspend operations include Papa John’s and Yum Brands while Burger King and Subway have continued operating under local franchisees. Burger King suspened corporate support for its units, and Subway said it has no corporate operations in Russia.
