Starbucks has become the latest consumer brand to pull out of Russia as the wider exodus of multinational companies from the country continues three months after its invasion of Ukraine.
The US coffee shop chain on Monday said that following the temporary suspension of its Russian business in March, it had “made the decision to exit and no longer have a brand presence in the market”.
It said it would continue to pay its 2,000 Russian workers for six months and help them “to transition to new opportunities outside of Starbucks”.
The chain has 130 outlets in Russia operated under licence by the Kuwait-based franchise company Alshaya Group.
The company’s announcement comes a week after McDonald’s said it had agreed a deal to sell its 850-restaurant Russian business to a local franchisee, allowing it to exit the country, while other franchisee-run businesses such as hotels have maintained operations citing the difficulty of extricating themselves from complex contracts.
Yum Brands, which owns Pizza Hut and KFC, this month said it was also in the process of transferring its restaurants to a local operator.
The departure of high-profile consumer brands from Russia represents a sharp reversal of the country’s embrace of western habits and companies following the fall of the USSR.
In a letter to employees on March 8, Kevin Johnson, then-chief executive of Starbucks, said the company was suspending “all business activity in Russia, including shipment of all Starbucks products”.
Edward Lewis, an analyst at Atlantic Equities, said companies had suspended operations to assess how long the war in Ukraine was likely to last before deciding on a full exit from the Russian market.
“It’s not a surprise given what we are seeing from a whole host of consumer companies in the US,” he said, adding that compared to the size of McDonald’s business in Russia, Starbucks’ departure was far less material. Its Russian operations accounted for less than 1 per cent of revenues.
Starbucks opened its first store in Russia in 2007 in a shopping mall north of Moscow, two years after it won a legal dispute over the use of its name by an unlicensed local operator.
Lewis said Starbucks, which is fighting a unionisation drive by staff in its core US market and heavy restrictions in China, had much bigger challenges.
“How we buy our coffee is different from three years ago. [There’s] a lot more delivery, a lot more drive-through and if you work at Starbucks your job is probably very different,” he said.