Domino’s Exiting Russia and Plans to File for Bankruptcy There

Domino’s Exiting Russia and Plans to File for Bankruptcy There

142 Sites to Close as Kremlin Compounds Difficulties of Departure

Domino’s Pizza’s Russia operator, DPRussia, will close all 142 of its Russia units and file for bankruptcy for those businesses, according to reports from Reuters, CNN and The Washington Post. DP Eurasia owns DPRussia as well as the Domino’s Pizza locations in Turkey, Azerbaijan and Georgia.

DP Eurasia failed in its efforts to find a buyer for DPRussia, according to The Washington Post, citing a news release from DP Eurasia. DPRussia is the third-largest pizza delivery company in that nation.

Business Exits Thwarted

CNN stated that “the Kremlin has made it vastly more difficult and more costly for Western companies to sell their Russian businesses.” A Russian decree allows seizure of the assets of unfriendly corporations, which has put business leaders on edge, The Washington Post pointed out. And the news release from DP Eurasia noted that Russia has carried out such seizures with the Danish brewer Carlsberg and Danone, a French company that makes yogurt.

The DP Eurasia statement further said that “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.” DP Eurasia added that it is too early to assess the financial loss of the potential insolvency in Russia.

Sale Attempts Began Months Ago

Reuters reported that in December, DP Eurasia was weighing what to do with its Russian Domino’s stores, including a sale, as many Western companies have done when leaving the country in response to its unprovoked invasion of Ukraine.

Some franchises left quickly with fire sales or simply turned over their interests to local managers, Reuters noted. McDonald’s and Starbucks, for instance, pulled out more than a year ago.

Rebirth of Russian Domino’s?

It’s possible that its pizza outlets will continue to operate in Russia under new ownership and branding. McDonald’s and Starbucks were taken over by local Russia enterprises and renamed after their parent companies left. Domino’s Pizza Inc. has said that early in 2022 it had “stopped providing any support for the Russian market” through its subsidiaries.

Yale University researchers have said that more than 1,000 foreign companies have exited or suspended operations in Russia since the Kremlin invaded Ukraine, CNN and The Washington Post reported. An additional 378 firms worldwide still do business in Russia but have reduced investments and operations there.

Source: FranchiseWire

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