'They appreciate a good pizza!' American boss of 190 Papa John's pizza stores defends decision to stay open in Russia in defiance of US chain's bosses vow to close there

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An American Papa John's boss living in Russia plans to keep all the country's pizza shops open despite the brand announcing last week that it was suspending all of its corporate operations in the country over the war on Ukraine.

Christopher Wynne, a Colorado native who has lived and worked in Russia part time since the early 2000s, said Papa Johns will continue to operate all 190 of its stores there, even after the US-based head office said they'd be closing.

He is able to ignore that edict because the Russian outlets are owned by franchisees, who buy their supplies from an independent company that he owns. Wynne began working with local suppliers when Russia annexed Crimea in 2014, and now gets almost all of his produce from within the country - except for olives. 

That means he does not have to rely on the US brand for supplies to keep the stores running.  

Wynne said his 'interest is first and foremost my employees and franchisees and keeping the lines of cultural exchange with the Russian people open'.

'The best thing I can do as an individual is show compassion for the people, my employees, franchisees and customers without judging them because of the politicians in power,' he told the New York Times on Monday. 

'The vast majority of Russian people are very clearheaded and understand the dark gravity of the situation they're in. And, at the end of the day, they appreciate a good pizza.' 

Wynne's company, PJ Western, operates 190 Papa John's restaurants in Russia and despite the pizza cooperation's decision to suspend operations, he and his fellow franchisees do not plan to follow suit. 

The pizza company is just one of several quick-service restaurant chains to halt or limit operations in Russia. Burger King on Thursday became the latest to do so, following the footsteps of McDonald's, KFC, Pizza Hut and Papa John's International. 

Wynne said Russia's Papa John's shops are primarily owned by Russian through a franchise agreement controlled by PJ Western, which reported $59million in revenues in 2020.

Papa John's International cut ties with PJ Western when it announced two weeks ago that  it would no longer 'provide operational, marketing or business support to the Russian market.' 

'Our perspectives diverged fairly quickly,' Wynne said of the brand's decision.   

'Papa John's is worried about the corporate and political winds that, on a day-to-day basis, I cannot focus on.'

He instead is focused on the needs of his workers, noting that his company oversees franchisees that employ 9,000 people.

'The current situation will increase the challenges we are faced with, but I believe that what we are doing is the right thing to do,' Wynne explained, noting that he prefers to prioritize business rather than politics.

Wynne, who is married to a Russian woman with whom he shares a two-year-old daughter, claims it 'has never been my responsibility or right to comment about the politics in Russia' and that he instead is focused on how his businesses can provide opportunities to residents of the country.

He also noted that American businesses shuttering Russian locations 'will face increased scrutiny from the [local] government,' but reiterates his companies 'will not fall in this category since the business continues to operate.'

The franchise owner also explained that although retailers have stopped selling goods in Russia, little has changed with his pizza operations. 

'In 2013, about 92 percent of my supply chain was imported,' he said, before adding that in 2014 - when the U.S. imposed sanctions on Russia for annexing Crimea - he began working with Russian farmers and manufacturers to get the ingredients necessary for his stores to operate.

'We switched to an entirely localized supply chain,' Wynne said. 'The only thing we import is olives.' 

He also shared that despite the war and widespread anxiety for their loved ones in Ukraine, Russian 'customers were showing up as usual.' 

Additionally, Wynne said that despite the various sanctions that have made it difficult to conduct international financial transactions, internal credit card payment systems and the internet remain functional. 

Dozens of companies pulled out of Russia, with video game makers Nintendo and Sony halting all product shipments, packaged food giants Nestle and Mondeleze International halting investment, and tobacco groups scaling back operations.

Just last week, Burger King's parent company Restaurant Brands International chain said it will halt corporate support for the 800 franchisee-owned Burger Kings in Russia, as well as refuse any new investment or expansion. 

The announcement followed similar moves from McDonald's, KFC, Pizza Hut and Papa John's. 

Analysts allege that although temporarily closing restaurants may not have much of an impact of large corporations like Papa John's International or Yum Brands Inc, the parent company of KFC, it could cause financial ruin for franchisees. 

'These are Russian-owned businesses, owned primarily by Russians or Russian institutions, that don't share our beliefs or requirements,' Michael Seid, the founder of global franchise advisory firm MSA Worldwide, told the Times. 

'The Russian franchisee has debt, has to pay the employees. They're going to do what is in their best interest, and it will all get sorted out later.' 

Meanwhile, in a statement emailed to the newspaper, Papa John's International claimed its decision to pause operations in Russia was 'supported by the vast majority of our team members, franchisees, customers and communities around the globe.' 

The company also said in a regulatory disclosure last week that it could end up having to absorb the cost of $15.2million of receivables associated with its master franchisee in Russia, which runs all of its 188 restaurants there.

Royalties from the franchisee made up less than 1 percent of Papa John's total revenue in 2021, the company said.

The pizza chain also said noted that it ceased all operational, marketing and business support to - and engagement with - the Russian market, and that it is not receiving any royalties from restaurants there.  

Similarly, McDonald's said last Wednesday that the temporary closure of its 847 stores in Russia will cost the fast-food chain about $50million a month.

The fast-food company, an icon of the post-Soviet era, runs 84 percent of its Russian locations itself and said it will continue paying all of its 62,000 staff and restaurant employees there. 

Other costs will come from sites it leases and supply chain operations, Chief Financial Officer Kevin Ozan said during a UBS conference on Wednesday.

'This is a really challenging and complex situation for a global company like us,' he said.

At least six other fast-food brands with more than 2,600 outlets combined in Russia could also take a financial hit from any decisions to pull out, even though nearly all of those restaurants are owned and operated by independent franchisees.

Yum Brands Inc, Kentucky-based parent company of the fried chicken chain KFC, said Wednesday that it was was suspending operations of 70 of its at least 1,000 restaurants in the country. 

Most of the KFC locations in Russia are owned by franchise and license partners, which may complicate efforts to shutter the operations. 

The company, which also owns Pizza Hut, also said it was finalizing an agreement to suspend operations of all 50 of the pizza chain's Russian locations. 

'Yum! Brands is suspending operations of KFC company-owned restaurants in Russia and finalizing an agreement to suspend all Pizza Hut restaurant operations in Russia, in partnership with its master franchisee,' the company said. 

The company added that it would donate all profits from operations in Russia to humanitarian efforts.

Meanwhile, Ukraine and Russia held another round of talks Monday as Moscow's forces pounded away at cities across the country, including the capital.

The latest negotiations were the fourth round involving higher-level officials from the two countries and the first in a week. The talks ended without a breakthrough after several hours, with an aide to Ukrainian President Volodymyr Zelensky saying the negotiators took 'a technical pause' and planned to meet again Tuesday.

The two sides had expressed some optimism in the past few days with Zelensky's aide tweeting that the negotiators would discuss 'peace, cease-fire, immediate withdrawal of troops & security guarantees.' Previous discussions, held in Belarus, produced no lasting humanitarian routes or agreements to end the fighting.  

Despite plans for further talks, large explosions thundered across Kyiv shortly before dawn on Tuesday while Russia pressed its advance on multiple fronts.

Elsewhere, a convoy of 160 civilian cars left the encircled port city of Mariupol along a designated humanitarian route, the city council reported, in a rare glimmer of hope a week and a half into the lethal siege that has pulverized homes and other buildings and left people desperate for food, water, heat and medicine. 

Overall, nearly all of the Russian military offensives remained stalled after making little progress over the weekend, according to a senior U.S. defense official who spoke on condition of anonymity to discuss the Pentagon's assessment. 

Russian troops were still about nine miles from the center of Kyiv, the official said.

The official said that Russian forces have launched more than 900 missiles but that Ukraine's airspace is still contested, with Russia not achieving total air superiority.

Airstrikes have been reported across the country, including the southern city of Mykolaiv, and the northern city of Chernihiv, where heat was knocked out to most of the town.  Explosions also reverberated overnight around the Russian-occupied Black Sea port of Kherson. 

Since Russia invaded invaded Ukraine on February 24, the United Nations has recorded at least 596 civilian deaths, although the agency believes the true toll is much higher. 

Millions of Ukrainians have fled their homes, with more than 2.8 million crossing into Poland and other neighboring countries in what the U.N. has called Europe's biggest refugee crisis since World War II.