Burger King Russia Partner Refuses To Shut Down Restaurants

(RTTNews) - Responding to Russia's attack on Ukraine and its people, Burger King has started the process to dispose its 15% stake in its Russian business. But it cannot immediately suspend operations in the market because of the terms of existing joint venture agreement, the burger chain told employees in an open letter on Thursday.

Burger King entered the Russian market ten years ago through a joint venture partnership. It has three joint venture partners in Russia that are controlled by Alexander Kolobov, who is responsible for the day-to-day operations and oversight of the about 800 restaurants in Russia; Investment Capital Ukraine - one of Ukraine's largest investment firms; and VTB Capital. VTB Capital, as an affiliate of one of Russia's biggest banks, has partnered with several other western companies in Russia, including other large QSR brands.

Burger King owns a minority stake (15%) in the joint venture and none of the partners has a majority share.

The restaurant chain, owned by Restaurant Brands International or RBI, said last week it was suspending all corporate support for its 800-plus franchised locations in Russia. The suspension includes operations, marketing, and supply chain support in addition to refusing approvals for new investment and expansion.

RBI's International President, David Shear, told employees in the open letter on Thursday that the company contacted the main operator of the business, Alexander Kolobov, and demanded the suspension of Burger King restaurant operations in Russia. But he has refused to do so.

Shear said in the letter, "Would we like to suspend all Burger King operations immediately in Russia? Yes. 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."

Shear said the company committed to redirecting any profits it receives from the business, including ownership stake, to the United Nations' refugee agency (UNHCR) and made an immediate donation of $1 million toward that commitment.