Russia targets 200 McDonald's restaurants as quarterly profits tumble

McDonald's reported a 30% decline in third quarter profits citing challenging conditions in the US and Asia

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Russia is not lovin' it.

Health officials are investigating more than 200 McDonald's restaurants in Russia citing health and safety violations in a seemingly tit-for-tat move against American companies operating in the country.

In a statement, the fast-food chain said the Russian consumer watchdog Rospotrebnadzor had also ordered the closure of nine more restaurants after it carried out “unscheduled” inspections.

In August, McDonald's was ordered to shut three Moscow restaurants, including Pushkin Square- Russia's first McDonald's opened in 1990 coinciding with the collapse of the USSR- as Western leaders slapped more sanctions on the Kremlin.

 

Over the weekend, McDonald's said it would appeal the decision and take the case to a higher court. The fast-food chain, which operates 440 restaurants in Russia, enjoyed a good relationship with Russian authorities until recently and was one of the official sponsors of the Sochi Games earlier this year.

But it seems Ronald McDonald is caught in the crossfire between Washington and Moscow over Ukraine.

The closures in Russia come at a difficult time for McDonald's, which reported a 30 per cent decline in third-quarter profits on Tuesday, citing increased competition in the US and challenging market conditions in Asia and Europe.

The retailer saw a slowdown in sales in China where it was hit by a food scare scandal after one of its suppliers was accused of selling rotten meat. Discussing the results, chief executive Don Thompson conceded the chain's "performance fell short" of expectations.

Net income fell to $1.07 billion, or $1.09 per share, in the quarter ended 30 September, from $1.52 billion, or $1.52 per share, a year earlier. Total revenue fell 4.6 per cent to $6.99 billion.

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