Burger King says Russian partner has 'refused' to shut restaurants

18 March 2022 by
Burger King says Russian partner has 'refused' to shut restaurants

The parent company of Burger King said it is unable to close its 800 restaurants in Russia as its operator in the country has "refused" to do so.

Restaurant Brands International said its local partner, Alexander Kolobov, had not suspended trading despite its demands otherwise.

In an open letter, Restaurant Brands International president David Shear said its contracts with franchisees meant there were legal arrangements that ensured it couldn't "shut down the business" in the country.

Shear said: "We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia. He has refused to do so.

"Any current attempt to enforce our contract would ultimately require the support of Russian authorities on the ground and we know that will not practically happen anytime soon. This is also why you may see other brands in Russia with similar structures continue to operate in the market."

Burger King entered the Russian market 10 years ago through joint venture partnerships with Kolobov, Investment Capital Ukraine and VTB Capital, an affiliate of Russia's VTB Bank, which has been sanctioned by the UK and other countries.

Restaurant Brands International own a 15% minority stake in the joint venture which it is in the process of disposing of.

The company has suspended all corporate support for restaurant operations in Russia and intends to donate any profits to the United Nations' refugee agency.

Shear said: "Would we like to suspend all Burger King operations immediately in Russia? Yes. Are we able to enforce a suspension of operations today? No. But we want to be transparent with our actions and explain the steps we have taken to stand with the international business community in response to Russia's attack on Ukraine and its people."

Other hospitality brands are pausing their business operations in Russia or pulling out of the country altogether. Jamie Oliver Group is exiting its franchise agreements in the country and hotel groups including IHG, Hyatt, Hilton, and Marriott International are suspending investment in Russia and closing corporate offices in Moscow.

Photo: James R Martin/Shutterstock

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