McDonald's Corp (NYSE:MCD) said it has reached an agreement to sell its Russian business to Alexander Govor, who currently runs 25 McDonald's restaurants in Siberia and has been a franchisee since 2015.
Though financial terms were not disclosed, the company warned investors it would lose more than US$1bn from the exit.
The opening of McDonald's first Moscow restaurant in 1990 marked a thaw in Cold War tensions in Russia, and when the Soviet Union collapsed a year later Russia's economy opened to the West.
The burger chain suspended operations in Russia this March due to the "humanitarian crisis" and "unpredictable operating environment" caused by the Ukraine war, and said the war would cost it US$127mln in the first quarter.
Russia and Ukraine contributed about 9% of McDonald's revenue last year.
McDonald's expects the sale agreement to the Siberian Licensee to close within a few weeks, pending regulatory approval, with Gover expected to continue to operate McDonald's 850 Russian restaurants under a new name.
McDonald's 62,000 Russian employees will be retained by Govor for two years on comparable terms, with Gover also agreeing to pay McDonald's corporate employees until the sale is complete.
"McDonald’s in Russia embodied the very notion of glasnost and took on outsized significance," chief executive Chris Kempczinski wrote in a letter to the McDonald’s system on Monday, after disclosing the sale.
"Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens, is surely the right thing to do. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine," Kempczinski said in his letter.
"However, we have a commitment 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," he said.