The Times - UK (2022-05-17)

34 Tuesday May 17 2022 | the times

Business

made it a difficult decision to leave” the

country. “However, we have a commit-

ment to our global community and

must remain steadfast in our values,

and our commitment to our values

means that we can no longer keep the

arches shining there.”

In Ukraine, where its 100 or so

restaurants remain closed for now, the

company continues to pay its workers

while also supporting aid and relief

efforts for refugees from the country

across Europe.

McDonald’s said that it expected to

achieve an operating profit margin of

about 40 per cent for its 2022 financial

year as a result of the loss of its Russian

business. It expects capital expenditure

this year to be within a range from

$2.1 billion to $2.3 billion.

McDonald’s first began looking into

the Russian market in the late 1970s and

its persistence in badgering govern-

ment officials was initially rewarded

with a contract to provide food for the

1980 Moscow Olympic Games.

When it opened its first restaurant on

January 31, 1990, the restaurant was far

more than simply one extra dot on the

McDonald’s map. It became synony-

mous with capitalism and American

culture and was regarded by both

Russians and westerners as a symbol of

the final death knell of the Soviet

Union, which collapsed almost two

years later.

For Muscovites who had never trav-

elled to the West, it was one of the most

exciting events in the city for years.

They started queuing outside the res-

taurant at 4am and by the time the

doors were flung open at 10am there

was a 500-yard line of customers wait-

ing to get in.

1

Petrol retailers have been

accused of profiteering from

the energy crisis after new

research found they had failed to

pass on nearly half of Rishi

Sunak’s 5p fuel duty cut. As diesel

prices hit record highs, the RAC

said retailers were taking, on

average, 2p more in profit per litre

of fuel than before the chancellor’s

duty cut in March. Page 1

2

Working from home is far

more popular in Britain than

countries in Europe and

North America, with commuting

journeys down by more than a

fifth since pandemic restrictions

eased, the latest figures from

Google’s mobility report show.

Page 2, letters to the Editor, page 28

3

Britain faces an “apocalyptic”

rise in food prices caused by

Russia’s invasion of Ukraine as

households are hit by a “very real

income shock”, Andrew Bailey, the

governor of the Bank of England,

has warned. Pages 4, 33

4

The invasion of Ukraine and

western sanctions have

brought Renault’s majority

ownership of Lada, Russia’s best-

known car marque, to an end.

Page 33

5

Britain’s top fraud

investigators face paying up to

£70 million in damages after a

judge found they had committed a

“serious breach” of their duties

during a corruption inquiry. In the

latest blow for the Serious Fraud

Office, a judge ruled that senior

investigators had wrongly

communicated with a City lawyer

acting for the Eurasian Natural

Resources Corporation, which had

been investigated unsuccessfully

for fraud by the agency. Page 33

6

Fewer office workers in town

and city centres are affecting

sales at Greggs, although the

bakery chain said strong demand

for its hot food and at its shops at

railway stations meant its

performance was still in line with

expectations. Page 36

7

Critics want a banking

industry compensation

scheme to be scrapped after it

emerged it had produced only six

financial awards almost two and a

half years after it started accepting

cases. The Business Banking

Resolution Service is thought to

have cost banks more than

£30 million in set-up costs. Page 38

8

Tens of thousands of

apprenticeships could be

created and hundreds of

millions of pounds saved if the

apprenticeships levy is reformed, a

poll by the British Retail

Consortium suggests. Page 39

9

In contrast with a television

future dominated by viewing

on demand, based on

subscriptions and without

commercial breaks, some of the

biggest names in American media

are jostling to offer a familiar

proposition: linear content that’s

free to watch, alongside adverts.

Page 40

10

Ryanair will fly 15 per cent

more services this

summer than in the

holiday season before the

pandemic struck after forecasting

it will carry a record 165 million

passengers this year. Page 41

Need to know

McDonald’s closes doors on

A venture loaded with

cultural significance

has been brought to

an abrupt end, writes

Dominic Walsh

The Golden Arches are quitting Russia

— permanently. More than three

decades after McDonald’s opened its

first outlet on Pushkin Square in

Moscow to queues that snaked around

the block, the American fast-food chain

is to sell its Russian restaurants.

The company said that, in the wake

of Russia’s invasion of Ukraine, it had

started the process of selling its entire

chain of about 850 stores. It said that it

was seeking a local buyer and would

make job security for its 62,000 em-

ployees part of any sale agreement.

McDonald’s joins a lengthening list

of western brands that have taken steps

to withdraw from Russia since its

invasion in February and the imposi-

tion of economic sanctions by the West.

These include Carlsberg, Danone, Ren-

ault and Shell.

In a statement, the company said:

“The humanitarian crisis caused by the

war in Ukraine, and the precipitating

unpredictable operating environment,

have led McDonald’s to conclude that

continued ownership of the business

in Russia is no longer tenable, nor is it

consistent with McDonald’s values.”

The sale, which is expected to

crystallise a non-cash financial hit of

between $1.2 billion and $1.4 billion, will

involve the “de-arching” of all its Rus-

sian restaurants through the removal of

the brand’s name, logo, branding and

menu. The state-run Tass news agency

reported that the restaurants would

open under a new name as soon as next

month. McDonald’s will retain its

trademarks in Russia.

The Chicago-based company closed

all 847 of its branches in Russia in

March after pausing its operation there,

but the move left open the possibility

that it could eventually reopen the

business.

Chris Kempczinski, 53, its chief exec-

utive, said that the “dedication and

loyalty to McDonald’s of employees

and hundreds of Russian suppliers

Market volatility is a big plus for trading platform

Annual revenues and profits at Plus500

are set to “significantly” exceed market

expectations as the online trading plat-

form benefits from the rise in market

volatility caused by the war in Ukraine.

In an unscheduled trading update

yesterday, the FTSE 250 company said

that its second-quarter trading had

been “very strong”, boosted by the

development of new technologies and

products, which it said would “deliver

growth and drive expansion and diver-

sification across new geographies”. The

consensus forecast among analysts in

the City had been for revenue this year

of $628.4 million and underlying earn-

ings of $290.5 million.

Plus500 made revenues of $718.7 mil-

lion last year and profit of $387.1 million,

having benefited from amateur punters

piling into the markets at the onset of

the Covid-19 pandemic. However, that

tailwind has receded since then.

The update prompted analysts to lift

their forecasts and shares in Plus500 to

rise by 62p, or 4.1 per cent, to £15.73, ex-

tending gains this year to 15 per cent.

Plus500, which is based in Israel, is a

seller of complex derivatives called

contracts-for-difference, which allow

have-a-go traders to place bets on price

movements in markets from foreign

exchange to cattle futures. Its custom-

ers can trade CFDs in more than 50

countries and in 30 languages. These

derivatives allow users to increase the

size of their wagers using leverage that

boosts their returns from profitable

trades, but also means that they face

heavier losses if bets go wrong.

Losses suffered by amateur traders

who have been caught out by the recent

period of market volatility, in arenas

from equities to oil, after Russia’s inva-

sion of Ukraine in February has been

lifting revenues at the company.

Plus500 reiterated that it was “active-

ly targeting acquisitions” and said that

its financial position “remains very

robust”. It was said to be debt-free, “with

healthy cash balances driven by con-

sistently high levels of cash generation”.

Analysts at Liberum, the broker, said

that they were increasing their fore-

casts for 2022 revenues and earnings at

Plus500 by 8 per cent and 16 per

cent, respectively, to $675 million and

$330 million.

Alex Ralph

Many of the estimated 30,000 cus-

tomers who crossed the threshold that

day dressed for the occasion, wearing

traditional clothing, while others went

American in full Mickey Mouse,

Donald Duck or Goofy costumes.

Russian soldiers and local police also

joined the crowds who were deter-

mined to get their hands on a Big Mac

and fries, despite the high price as a

percentage of wages. At the time it was

the biggest McDonald’s in the world,

with 900 seats, and, according to The

Washington Post, it attracted 27,000

applications for 630 jobs.

Globally, McDonald’s has restau-

rants at more than 39,000 locations in

more than 100 countries. Most are

owned by franchisees — only about

5 per cent are owned and operated by

the company — although in Russia the

proportion is the other way round, with

A McDonald’s restaurant in Moscow shortly before its operations were paused last month. It reported an increase in takings

Underneath the arches

China

Japan

Germany

France

Canada

UK

Brazil

Australia

Russian Fed

US

3,500

2,900

1,536

1,500

1,458

1,421

1,031

981

850

13,375

Countries with the most McDonald’s