Wednesday 29 June 2022

Starbucks to leave the Russian market, close down its 130 stores

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MILAN — Starbucks is leaving Russia after 15 years in the country, the company said in a statement posted Monday on its website. The American coffee giant announced at the beginning of March it would pause its operations and stop shipments of its products to Russia, but now it has decided “to exit and no longer have a brand presence in the market,” the statement reads, without saying when the move will become effective.

As a result of leaving the Russian market, 130 stores will shut down. The company said it would continue to pay nearly 2,000 staff working at its shops in the country for six months and provide assistance “to transition to new opportunities outside of Starbucks”.

Starbucks opened its first Russia-based coffee shop in 2007, in a shopping mall on the outskirts of Moscow.

They were unable to enter the market before because Sergei A. Zuykov, a trademark squatter, had the intellectual property rights to their name.

The Russian lawyer offered to sell them back their name for $600,000, but the company refused. In 2005 Starbucks eventually won the name back in a civil case.

The move comes a week after McDonald’s announced that it would exit Russia completely and sell its 850 restaurants.

McDonald’s has operated in Russia for over 30 years, opening its first outlet in Moscow in 1990.

Unlike McDonald’s, Starbucks didn’t operate its cafes in Russia, but had a licensing deal with Alshaya Group, a Kuwait-based franchise operator.

In its latest quarterly results released in early May, the company did not disclose the financial impact of the suspension of business operations. According to sources, Russia accounts for less than 1% of Starbucks’s annual revenue.

Russia and Ukraine accounted for 9% of McDonald’s revenue in 2021.

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