Domino’s Exits Russia The End of a Pizza Era

In a significant move, Domino’s Pizza has announced the closure of all its 142 outlets in Russia, marking its exit from the country. This decision makes Domino’s one of the first major Western fast-food chains to withdraw from Russia, following in the footsteps of McDonald’s and Starbucks, which exited more than a year ago.

DP Eurasia, the company holding franchise rights for the Domino’s Pizza brand in Russia, Turkey, Azerbaijan, and Georgia, revealed its intention to file for bankruptcy for its Russian subsidiary, known as DPRussia.

The decision underscores the tough choices confronting Western companies that continued their operations in Russia after the Ukraine war commenced. The Kremlin has imposed substantial challenges and increased costs for Western firms looking to sell their Russian assets. In some instances, it has even seized control of these companies’ local assets, as seen with Danish brewer Carlsberg and French yogurt maker Danone.

“With the increasingly challenging environment, DPRussia’s immediate holding company is now compelled to take this step, which will bring about the termination of the attempted sale process of DPRussia as a going concern and, inevitably, the group’s presence in Russia,” stated DP Eurasia in an official statement.

The exact financial implications of the potential insolvency are still uncertain at this point.

Domino’s Pizza currently operates 142 stores in Russia and ranks as the third-largest pizza delivery business in the country. In December, DP Eurasia had announced that it was reviewing its presence in Russia, with ongoing efforts to potentially sell the business.

There is a possibility that these pizza outlets may continue to operate in Russia under new ownership and branding. McDonald’s and Starbucks in Russia were taken over by local entities and rebranded after their parent companies exited the country. Starbucks became Stars Coffee, while McDonald’s is now known as “Vkusno i tochka,” which translates to “Tasty, period.”

Domino’s Pizza Inc. (DPZ), listed on the New York Stock Exchange, revealed that it had ceased providing any support for the Russian market through its subsidiaries in early 2022.

According to researchers at Yale University, over 1,000 foreign companies have either exited or suspended their operations in Russia since the Kremlin initiated a full-scale invasion of Ukraine.

Approximately 378 global firms are still conducting business in Russia, although nearly half of them have suspended new investments and scaled back their operations in the country.

Domino’s Pizza’s decision to shutter all its stores in Russia reflects the challenging business environment created by geopolitical events. The fate of these outlets under new ownership remains uncertain, but this move underscores the complexities Western businesses face when operating in Russia today.