BNR – The franchise holder of Domino’s Pizza in Russia, DP Eurasia, has decided to shut down and declare bankruptcy. This signals a retreat from the challenging Russian market.
The decision comes as DP Eurasia announced it will not pursue the sale of the pizza chain’s outlets in Russia. The company cited an increasingly intricate business environment.
Due to the invasion of Ukraine and the economic sanctions, several Western firms have cut ties with Russia. Some companies, however, including Domino’s, have faced criticism for the ongoing operations in the country.
DP Eurasia currently operates 171 Domino’s Pizza outlets across Russia. It disclosed that it owns 68 of these establishments, while the remaining 103 are franchised to local operators.
The company conveyed its decision to file for bankruptcy for its Russian subsidiary, DP Russia. The move effectively halts the sale process of DP Russia as a going concern and marks the company’s impending departure.
Complex Business Landscape
In response to the challenging environment, DP Eurasia’s immediate holding company opted for this course of action. The company acknowledged the complexity and intricacy of the business landscape in the country.
Moreover, it had previously indicated that it was evaluating its presence in Russia following the imposition of sanctions.
Apart from its franchise in Russia, DP Eurasia holds master franchise rights for the brand across the whole world.
Challenges Lead to Domino’s Franchise Bankruptcy
The economic situation in Russia has seen significant damage because of sanctions imposed since its invasion of Ukraine. While many famous firms chose to halt operations in Russia after the invasion, there were pressures on McDonald’s and Coca-Cola to reconsider their contracts.
Criticism has also been directed at businesses that persisted in their Russian operations. Unilever, for instance, defended its decision to continue business activities in Russia, citing the complexity of the situation.