Western companies on alert as Russia shuts down McDonald’s restaurants

Richard Branson gathers business leaders in appeal for a ‘peaceful’ end to Ukraine crisis

Sir Richard Branson, founder of Virgin (Getty Images)

Russia has launched an investigation into dozens of McDonald’s restaurants, in what looks like a tit-for-tat retaliation against American interests after the West imposed sanctions over Ukraine.

Russia’s food safety watchdog said it was looking at possible breaches of sanitary rules at McDonald’s as it shut down four of its fast-food restaurants in Moscow.

But many in the business community said it was a reflection of the deterioration in relations between Russia and the West over Ukraine, where pro-Russian separatists are fighting against government forces.

In a separate move, the Virgin founder Sir Richard Branson called for a “peaceful resolution” of the Ukraine crisis in an open letter signed by other leading business and cultural figures from Russia, Ukraine and the West.

Unilever’s chief executive, Paul Polman, the Nobel Laureate Muhammad Yunus, PayPal co-founder Max Levchin and former eBay president Jeff Skoll joined Sir Richard in his call for “conversations, not armed conflict” over Ukraine amid concern about the impact on trade of a prolonged stand-off between Russia and the West.

Russia’s move against McDonald’s alarmed US business leaders. Alexis Rodzianko, chief executive of the American Chamber of Commerce in Russia, said: “Obviously, it’s driven by the political issues surrounding Ukraine. The question on my mind is: is this going to be a knock on the door, or is this going to be the beginning of a campaign?”

In a note to clients, the French bank Société Générale warned that the companies generating most revenues in Russia, and therefore most exposed to political risks, are British American Tobacco, BASF. Carlsberg, Coca-Cola, Alstom and E.ON.

Earlier this month Russia imposed bans on Western food imports after Washington and Brussels applied economic sanctions in response to Moscow’s annexation of Ukraine’s Crimea region and its backing of the separatists.

The country’s food watchdog is now stepping up its probe of McDonald’s, as it embarks on unscheduled checks in several Russian regions, including Sverdlovsk and Tatarstan in the Urals, the central Voronezh region and the regions around the capital. “We are aware of what is going on. We have always been and are now open to any checks,” a McDonald’s Russia spokeswoman said.

The news agency Reuters said no other prominent Western brand has reported coming under extra scrutiny from the Russian authorities, but there were Russian media reports that Jack Daniels was being investigated. The whisky producer said it would challenge any accusations about its quality.

AmRest, the Warsaw-listed holder of the Russian franchises for several other US brands — Starbucks, KFC, Pizza Hut and Burger King — said last week that it had experienced no problems and was doing well.

The Branson letter said: “As responsible leaders, we must ensure that differences are resolved peacefully, through dialogue and diplomacy, and with respect for both national sovereignty and the right of all human beings to live in peace.

“We as business leaders from Russia, Ukraine and the rest of the world urge our governments to work together to ensure we do not regress into the Cold War misery of the past. We call upon politicians to be bold and brave, so that our nations can end the painful suffering caused by war and once again collaborate for the greater good.”