Starbucks to permanently exit Russia, to close 130 licensed cafes

On Monday, Starbucks announced that it was leaving Russia after operating cafes for 15 years, in the country. It also said that it would close all the cafes it had across 130 locations. It follows suit after other major companies such as Exxon, McDonald’s and British American Tobacco have also withdrawn all operations in Russia. It is the latest multinational company to totally withdraw its Russian operations.

Although the company declined to comment on the loss of revenue after shutting the 130 locations of Starbucks in Russia, analysts said that less than one percent of the coffee company’s revenue per year came from the Russian market.

All the closed locations were licensed cafes and none of them were run by the company. However, it said that it will continue to pay its almost 2,000 employees in Russia for six months and would help them to gain new employment opportunities. Although the Seattle based company had projected growth in Russia, ten years ago, many locations were shuttered during the pandemic.

Starbucks had suspended its operations in Russia from March 8, following sustained pressure from consumers and investors in the West, following Russia’s invasion of Ukraine. Western sanctions also affected the business. There were no shipments of products from Starbucks and the cafes had also been closed, temporarily. Unwinding the license deals took time and now the process is coming to a conclusion.

Starbucks recently released its quarterly report in May. It didn’t disclose any financial impact due to the suspension of Russian operations. The Seattle-based company had pledged to give the royalties earned from its Russian cafes to Ukraine, under former CEO Kevin Johnson. It is not known, as yet if this pledge will be fulfilled by current CEO Howard Schultz

In 2007, Starbucks had opened its first store in Russia. In 2015, it opened its 100th store in Russia. In 2022, it has closed all its Starbucks cafes in Russia. All the stores were run by licensee Alyshaya group, which is based in Kuwait.

 

 


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