Following companies like Exxon, Netflix, and McDonald’s, is Starbucks the next mega-brand to exit Russia?
Monday morning, May 23, the Seattle-based coffee chain announced they were ceasing operations within the country after 15 years.
Equally important, how will this impact Starbucks — and its employees in Russia?
Consequences of the Starbucks brand Russia exit
Since early March, the successful coffee brand has suspended the operation of 130 Russian cafes. This includes not shipping Starbucks products to these stores and closing their doors.
However, the Starbucks brand’s full Russia exit has taken until now because corporate does not run the coffee shops. They are licensed locations.
As a result of this decision, the corporation plans on paying the 2,000 employees laid off within the country for six months. Starbucks has also stated they will help them find other opportunities.
“As we mentioned on March 8, we have suspended all business activity in Russia, including shipment of all Starbucks products. Starbucks has made the decision to exit and no longer have a brand presence in the market. We will continue to support the nearly 2,000 green apron partners in Russia, including pay for six months and assistance for partners to transition to new opportunities outside of Starbucks.“
What will this exit cost the coffee company?
Companies like Exxon and McDonald’s took huge financial hits from exiting Russia. On the other hand, Starbucks’ exit won’t have such a harsh impact.
The 130 Russian cafes generate only 1% of the mega-brand’s total annual revenue. That is in stark contrast to the 9% that McDonald’s lost by choosing to acquiesce to pressure to leave the country.
While its operations have been on pause since March, the announcement made Starbucks’ stance and exit official.
As the Kremlin continues its war with Ukraine, politics and consumers are leaning on companies to leave Russia in protest.