Yum! Brands announced Monday that it completed its exit from Russia, selling its 1,100-unit KFC business to two local operators.
Smart Service, led by former KFC franchisees Konstantin Yurievich Kotov and Audrey Eduardovich Oskolkov, will take over all Russian KFC restaurants, operating systems, master franchise rights, and the trademark to Rostik's, the name of a former Russian-based chicken chain. The sale was first announced in October and received all necessary approvals from the U.S. and Russian governments.
As part of the purchase agreement, Smart Service will keep all employees and rebrand KFC restaurants to Rostik's. The initial plan is to convert more than 100 stores. As a master franchisor, the company will also work with other franchisees to rebrand.
Rostik's was founded by Rostislav Ordovsky-Tanaevsky Blanco, a Venezuelan immigrant, according to Russia media outlet Business District. It debuted in 1993 and kept a leading position in fast food for more than a decade. In 2005, Yum! formed a joint venture partnership with Rostik Group (parent of Rostik's) and bought out the fast-food chain in 2011. Stores were then rebranded to KFC.
Yum! removed the 1,112 units in Russia from its global KFC store count at the start of Q2. It represented 4 percent of the chicken chain's systemwide footprint at the start of 2022. Yum!'s full-year core operating profit growth in 2022 was 6 percent, including a 2-point headwind from the removal of Russia profits. KFC's system sales growth was negatively impacted by 4 percentage points in Q4 due to the Russia exit and its operating profit growth was impacted by 3 percentage points.
The company announced in March 2022 that it suspended operations of corporately owned restaurants and halted investment and development efforts. In June, Yum! revealed that it transferred ownership of 53 Pizza Hut restaurants to a local operator.
Yum! follows the path of other major quick-service powers that left Russia due to the ongoing war in Ukraine. McDonald's closed 850 restaurants in March 2022 and sold its business to a former licensee. The burger chain kept its trademarks to preveny copycats, but the actual stores were rebranded to "Vkusno & Tochka," which translates to "Tasty and that's it." It ended a three-decade run in the country. Additionally, Starbucks left its 130-unit Russian business after 15 years in the market. The coffee chain's assets were sold to restaurateur Anton Pinskiy and rapper Timati, who converted Starbucks to Stars Coffee.