DP Eurasia, the operator of the Domino’s Pizza brand in Russia, Türkiye, Azerbaijan, and Georgia, has announced that it will file for bankruptcy for its Russian business unit and exit the country. The decision comes after unsuccessful attempts to sell the business unit due to the “increasingly challenging environment” in Russia, which has been negatively impacted by Ukraine-related Western sanctions.
DPRussia, the Russian unit of Domino’s Pizza, is the country’s third-largest pizza delivery company and operates approximately 142 outlets. DP Eurasia stated that its immediate holding company was compelled to take this step, which will lead to the termination of the attempted sale process and ultimately result in the group’s exit from Russia.
As part of the bankruptcy filing, DP Eurasia’s Turkish subsidiary settled the Russian unit’s external debt of around 520 million rubles ($5.56 million), reducing the group’s gross debt. This settlement resulted in a gross cash balance of 162 million lira ($5.97 million).
The exit of international businesses from Russia has become more complicated due to the adoption of various regulations by Moscow. Foreign companies are now obliged to sell their assets to Russian buyers at a 50% discount and are charged an exit fee of at least 10% of the transaction value. In July, the government further tightened the rules, prohibiting the transfer of funds abroad from the sale of businesses if the company is owned by an individual or parent from Russia’s list of ‘unfriendly’ nations. Foreign firms are also barred from including buyback options on the sale of their Russian assets for two or more years.
It is worth noting that several corporate food giants such as McDonald’s have retained the right to repurchase shares in their Russian subsidiaries after exiting the country. Some companies have also attempted to maintain a share of their capital or a place on the board. However, these measures have become less feasible due to the new regulations.
The exit of DP Eurasia’s Domino’s Pizza brand from Russia is another blow to the country’s foreign business landscape, as it reflects the challenges faced by international companies in the face of economic sanctions and restrictive regulations. The impact of these developments on Russia’s economy remains to be seen, as well as the potential effects on the Russian food and beverage industry.
In conclusion, DP Eurasia’s decision to file for bankruptcy and exit its Russian business unit highlights the difficulties faced by international companies operating in Russia amid Western sanctions and increasingly restrictive regulations. The exit of Domino’s Pizza from the country adds to the growing list of foreign businesses that have been forced to scale back or completely withdraw from the Russian market. The long-term implications of these developments for Russia’s economy and its food and beverage industry are yet to be fully understood.