McDonald’s Corp. is planning to leave Kazakhstan since the country’s McDonald’s franchisee has been unable to use Russian meat supplies or find alternate sources of supply as a result of the interruptions brought on by Russia’s invasion of Ukraine, Bloomberg informs citing sources.
The Kazakh licensee firm, Food Solutions KZ, said on November 18 that it will cease operations in the 20 million-person nation owing to “local supply concerns.” According to persons familiar with the situation who spoke to Bloomberg, McDonald’s forbade its regional franchisee from purchasing beef patties from its Russian suppliers. The business said in December that it was attempting to revive the operations of its 24 restaurants by negotiating supply agreements with regional farmers.
But it seems that the Kazakh company eventually failed to find reliable local or European suppliers of beef patties. The sources informed the news agency that operating the company at a loss would arise from higher prices and increased freight expenses to transfer materials throughout Kazakhstan’s large territory, Radio Free Europe/Radio Liberty reported.
The predicament of franchisee owner Kairat Boranbayev has also made the future of McDonald’s in Kazakhstan more difficult. After the “Bloody January” riots at the beginning of the previous year, he was detained in March on suspicion of embezzlement. An inter-elite power battle that occurred in the shadows of the political instability in January is thought to have implicated Boranbayev, a cousin of former president Nursultan Nazarbayev.
Additionally, Boranbayev owned the McDonald’s franchise in Belarus, which lost its license in 2022 due to supply concerns.
It’s likely that Russia’s Vkusno I Tochka (“Tasty, Fullstop”) McDonald’s replacement franchise might be interested in stepping in to fill the hole following McDonald’s departure from Kazakhstan after a six-year presence in the nation.
Although Belarus is different from Kazakhstan in that it is subject to severe Western sanctions due to its support for Russia’s war in Ukraine, the Russian chain announced its intention to enter the Belarusian market in late 2022. However, Belarus is different from Kazakhstan in that Kazakhstan is not subject to sanctions.
In 2022, McDonald’s in Belarus experienced persistent issues processing card payments as a result of all significant Belarusian banks being cut off from the SWIFT global payments network.
McDonald’s in Belarus withdrew 14 goods off its menu in October following the implementation of a new pricing regulatory system by the Belarusian government, citing supply chain difficulties.
Global payment system issues are not a problem for Kazakhstan’s McDonald’s locations.
In 1990, the year before the bloc was divided, McDonald’s opened a location in the Soviet Union. The biggest fast-food corporation in the world sold its network of restaurants in Russia in May.
It ran 853 locations in Russia at its height before the invasion of Ukraine. The McDonald’s locations were bought by Alexander Govor, who then reopened them under the Vkusno I Tochka name.
