Burger King says it wants to join the long list of businesses suspending operations in Russia but a business partner is blocking it from doing so.


What You Need To Know

  • Burger King says it wants to join the long list of businesses suspending operations in Russia but a business partner is blocking it from doing so

  • David Shear, international president of Restaurant Brands International, the company that owns Burger King, published an open letter on the company’s website Thursday explaining the situation

  • Shear said that RBI contacted Alexander Kolobov, who controls about 800 Burger Kings in Russia, to demand the restaurants in Russia to be closed, but “he has refused to do so.”

  • Shear explained that RBI only owns a 15% stake in the joint venture and cannot unilaterally cease operations because of its contract terms with partners

David Shear, international president of Restaurant Brands International, the company that owns Burger King, published an open letter on the company’s website Thursday explaining the situation. 

He said that when Burger King ventured into Russia a decade ago, it entered into a partnership with restaurant magnate Alexander Kolobov, the firm Investment Capital of Ukraine and VTB Capital, an affiliate of VTB Bank. Kolobov is responsible for day-to-day operations of about 800 Burger Kings in Russia, while Shear said his company, RBI, owns a 15% stake in the joint venture.

Shear said that RBI contacted Kolobov to demand Burger King restaurants in Russia to be closed, but “he has refused to do so.”

Shear explained that Burger King cannot unilaterally cease operations. 

“When master franchise agreements and joint ventures are formed, there are extensive commitments to long-term investments and accountabilities to grow the business together,” he said. “There are no legal clauses that allow us to unilaterally change the contract or allow any one of the partners to simply walk away or overturn the entire agreement. No serious investor in any industry in the world would agree to a long-term business relationship with flimsy termination clauses.

“Would we like to suspend all Burger King operations immediately in Russia? Yes,” Shear wrote. “Are we able to enforce a suspension of operations today? No. But we want to be transparent with our actions and explain the steps we have taken to stand with the international business community in response to Russia’s attack on Ukraine and its people.”

Spectrum News has reached out to Kolobov’s company, Shokoladnitsa, for comment.

Shear also said RBI has begun the process of disposing of its ownership stake in the business, but “it will take some time to do so based on the terms of our existing joint venture.” He added that Burger King has suspended marketing, supply chain support, and approvals of new investment and expansion in Russia. Burger King also is donating its Russian profits and an additional $1 million to the United Nations Refugee Agency and is distributing free meal coupons to feed Ukrainian refugees across 25 countries, Shear said.

Shear also noted that VTB Bank, one of its partners, has been sanctioned by the U.S. government and said RBI is “in full cooperation with all applicable sanctions.”

Burger King isn’t the only fast-food chain struggling to extract itself from the Russian market. Pizza chain Papa John’s announced last week it was ceasing operations in Russia, but 190 of its locations — the vast majority in the country — remain open because they are controlled by an operator who has, too, refused to close.

“The best thing I can do as an individual is show compassion for the people, my employees, franchisees and customers without judging them because of the politicians in power,” the operator, Christopher Wynne, an American, told The New York Times earlier this week.

While Wynne controls the shops, they are primarily owned by Russians.

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