McDonald's is losing a lot of money as a result of the war in Ukraine—$127 million in the last quarter, to be exact. The fast-food giant opted to close restaurants in Russia last month while continuing to pay its 62,000 employees there. In a Thursday call with analysts, CEO Chris Kempczinski said the company was doing the same thing in Ukraine, where restaurants have also been closed, per CNN. At the end of last year, there were 847 McDonald's restaurants in Russia and 108 in Ukraine, which together accounted for 9% of the company's 2021 revenue.
Payments covering staff, leases, and supplies in the two countries cost the company $27 million in the last quarter. The major hit came from "$100 million of costs for inventory in the company's supply chain that likely will be disposed of," including food, according to a statement. McDonald's is now losing roughly $55 million per month due to a lack of sales in Russia, per Al Jazeera. "We certainly don't take this decision lightly, but for us this is about doing what we think is the right thing to do, both for the global business and for our people locally," CFO Kevin Ozan says, per Huffington Post. "We expect this to be temporary," though "it’s impossible to predict when we might be able to reopen."
Though McDonald's net income was down 28% to $1.1 billion in the first three months of the year, global sales at restaurants open at least 13 months climbed 11.8%, per CNN. Sales also climbed 3.5% in the US. Prices at McDonald's have also climbed. They were up 8% in the last quarter, following a 6% increase last year, per CNN. "We are keeping ... a close watch on lower-end consumers just to make sure that we're still providing the right value," Ozan says. (A US couple just found preserved McDonald's french fries thought to be from 1959.)