McDonald's leaves Kazakhstan over supply shortages

Image source, ReutersImage caption, McDonalds has blamed "supply issues" on its reason for pulling out of KazakhstanBy Kathryn ArmstrongBBC News

McDonald's has closed its restaurants in Kazakhstan due to supply shortages.

The fast food company has not elaborated on what has caused the scarcity, but it is thought to be due to supply issues linked to Russia's invasion of Ukraine.

McDonald's is thought to have banned its local franchisee from procuring burgers from Russian suppliers.

The chain's Kazakh operator, Food Solutions KZ, said it would reopen its branches under a new brand.

In the capital, Alamaty, workers were seen removing the large white lettering from the front of one of the branches.

Neighbouring Russia is Kazakhstan's main trading partner but after Moscow invaded Ukraine on 24 February, it was hit with a raft of international sanctions. Kazakhstan agreed to comply with these.

As a result, many Kazakh businesses have faced supply problems.

According to Reuters, quoting a source close to Food Solutions KZ, the sanctions and the withdrawal of McDonald's from Russia in May prompted the company to start looking for suppliers elsewhere and to stop buying Russian products.

However, this has proven difficult and McDonald's announced in November that it was "temporarily" suspending its operations in Kazakhstan over supply issues. They now look to have closed for good.

Speaking at a meeting with the government on 12 December, Food Solutions KZ's head, Aset Mashanov, said efforts were being made to source meat products locally in order to restart its operations as soon as possible.

He also indicated that sourcing produce from abroad would be difficult if customs clearance and other red tape was not simplified.

In a statement, McDonald's confirmed its agreement with Food Solutions KZ had been terminated but did not give details why.

McDonald's first began operating in Kazakhstan in 2016, eventually opening restaurants in 24 cities and employing roughly 2,000 people.