Following the invasion of Ukraine, Burger King’s primary Russian partner claims he lacks the power to shutdown around 800 restaurants, contradicting the fast-food chain’s US corporate leadership’s claim that he had “refused” its request to close the sites.
After Restaurant Brands International president David Shear declared in an open letter that the franchisee was opposing a corporate direction to close outlets, Russian businessman Alexander Kolobov retaliated.
Kolobov believes he lacks the “authority or power” to shut down the 800 stores in reaction to the invasion, claiming his 30% stake in a joint venture with Burger King puts him “far below the control” needed to act.
Following the dispute, RBI is selling off its business operations in Russia, which it owns a 15% minority stake in.
“All shareholders must consider the impact on the employees and their families before deciding to terminate and stop operations of the franchisee, which employs roughly 25,000 people,” Kolobov said in a statement to the BBC.
Burger King’s parent firm has stated that it intends to sell its Russian business assets.
RBI did not respond to a request for comment on his views right away.
Burger King’s owner operates in Russia through a joint venture with Kolobov, investment firm Investment Capital Ukraine, and VTB Capital, a subsidiary of Russia’s VTB Bank, according to RBI’s Shear.
Shear’s position in the open letter describing Burger King’s conundrum in Russia was disputed by Kolobov’s reaction. Shear said that Kolobov is “responsible for the day-to-day operations and oversight of the 800 restaurants in Russia” in the lengthy statement.
“We contacted the company’s chief operator and demanded that Burger King restaurants throughout Russia be shut down.” Shear stated, “They have declined to do so.”
Burger King couldn’t close without Kolobov’s permission or interference from Russian authorities, who have become increasingly antagonistic to Western businesses, according to Shear.
RBI has “stopped all corporate assistance” for Burger King stores in Russia, according to Shear, and aims to give any earnings from the agreement, including the sale of its ownership portion, to the UN refugee agency.
“Would we wish to immediately cease all Burger King operations in Russia?” Yes. Are we able to put a halt to operations right now? “No,” Shear clarified.
The dispute between RBI and one of its business partners exemplifies the difficulties that several Western corporations have had in winding down their activities in Russia in reaction to the Kremlin’s invasion.
McDonald’s, Burger King’s fast food rival, closed all of its restaurants in Russia, only to have a local operator known as “Uncle Vanya” file a trademark application with a logo that is virtually identical to its “golden arches” in an apparent attempt to take over the company.