Despite its parent company’s commitment to withdraw more than a year ago, Burger King outlets in Russia continue to operate normally, drawing criticism and raising questions about the fast-food giant’s delayed exit.
Restaurant Brands International (RBI), which owns 15 percent of Burger King’s franchise business in Russia, has faced scrutiny for sustaining operations despite announcing plans to leave in March 2022.
RBI, one of the world’s largest fast-food restaurant companies, stated in March 2022 that it had initiated the process to exit Russia. However, 18 months later, the company has provided no updates on its progress, leaving many wondering about the reasons behind the delay.
The firm cited its complicated franchise agreement as a significant hurdle in exiting the country. The deal, a joint venture with three partners covering approximately 800 restaurants, has created legal and contractual entanglements, according to David Shear, RBI’s president.
He stated that Burger King’s main operator in Russia had refused to shut down outlets following the first attacks on Ukraine, making the process of exit challenging.
Duy Vo, a consumer trends analyst and founder of Sandjest, told Express.co.uk that Burger King’s situation appears entangled in a web of control and influence wielded by key players, including Alexander Kobolov, ICU Group, and VTB Capital, an affiliate of VTB Bank, in Russia’s business dynamics.
He said: “It’s noteworthy that other global fast-food giants, McDonald’s and KFC, charted their exit strategies successfully. RBI’s predicament, however, appears tangled in a web of legal and contractual entanglements. Key players shaping the destiny of Burger King in Russia include Alexander Kobolov, ICU Group, and VTB Capital, an affiliate of VTB Bank, collectively wielding significant control and influence over the business dynamics.
“From the lens of a consumer trends analyst, such manoeuvres by global brands play a pivotal role in shaping consumer perceptions and trust. The implications are manifold.
“On one hand, retaining operations can be perceived as an economic endorsement, potentially undermining the intent and efficacy of sanctions. On the other, for Western corporations, consistent actions aligned with public stances augment credibility. Divergence, as seen in RBI’s case, can cast shadows on their broader commitment to global socio-political causes.”
Also speaking to Express.co.uk, Alison Lancaster, PR expert and co-founder of Pressat, highlighted the complexities faced by companies dealing with franchises and international issues. Lancaster pointed out that the delay in Burger King’s exit raises questions about the impact of sanctions on Russia and the varying challenges faced by Western brands navigating intricate agreements and politics.
She said: “So RBI says complicated franchise deals are why it’s taking so long to get Burger King out of Russia. But with their 15% stake, seems like they’d have some power to just close shops. They say they’ve cut off new money and supplies and all that. But critics point out Starbucks and others exited no problem.
“The wait does raise questions about impact on sanctions on Russia. Some think Western brands should take a stand and leave fast to hit Putin. But it’s complex for companies navigating tricky agreements and politics.
“As someone in PR, I see it’s not black and white. These big brands like RBI have unique challenges dealing with franchises and international issues. Even if they cut the franchise deal, Burger King brand might not fully disappear in Russia if local owners just rebrand and keep running it.
“In the big picture of Western pressure on Russia, each company’s situation is different. How they handle exiting will be seen differently by governments, customers, advocates, etc. The Burger King delay has many views from different stakeholders.”
