McDonald’s buying back all its Israeli restaurants following boycott

by Mick the Ram

Fast food giant McDonald’s is to buy back all its restaurants in Israel following a boycott of the brand in response to the Israel-Hamas war.

The boycott was sparked after Muslim-majority countries such as Kuwait, Malaysia and Pakistan issued statements distancing themselves from the firm for its perceived support of Israel.

Although McDonald’s is a global company, very often its franchises are owned locally and operate autonomously.

The company said it had reached an agreement with franchisee Alonyal for the return of 225 outlets across the country, which gave employment to around 5,000 people.

Alonyal, who have been running the chain of restaurants in Israel for more than 30 years, had started giving away thousands of free meals to Israeli soldiers, a move which prompted heavy criticism in McDonald’s direction.

Sales in the region have dramatically slumped since the conflict began last October, something which has been attributed to a boycott and which the company described as “disheartening and ill-founded”.

Full terms of the sale have not been revealed, although McDonald’s have stated that the restaurants, operations and employees would all be retained “on equivalent terms” and also reiterated that it remained “committed to the Israeli market”.

One in twenty in the Middle East

McDonald’s relies on thousands of independent businesses to operate the vast majority of its 40,000 plus stores, spread all around the world. It is calculated that just over 5% of these are located in the Middle East.

Performance impact spreads

As the war progressed, so too did the vocal protests gather support, with boycotts called for in the immediate area, before spreading beyond the conflict region.

In January the popular food chain admitted the war had “meaningfully impacted” its global performance, revealing that although trade was worst affected in the Middle East, there had also been noticeable fall off in countries such as France, Indonesia and Malaysia.

Shares in McDonald’s fell around 4% after the announcement.

Sales target missed

Chief executive Chris Kempczinski placed a proportion of blame on “misinformation” spread on social media, but accepted that the bottom line was that the company missed its quarterly sales target for the first time in nearly four years, dating back to the Covid period.

The feeling was that as long as the war continued there was every likelihood that the situation would worsen further. Mr Kempczinski said it was a “human tragedy” and added that with that in mind, it does “weigh on brands like McDonald’s”.

Reputation on the line

By taking the Israeli operation back “in house” the firm will be hoping it can have the effect of restoring its previously good reputation in the region, and allow key sales targets to once again be met.

Conflict biting Starbucks too

McDonald’s are not alone in being on the receiving end of a boycott and protests by anti-Israeli campaigners. Other huge Western corporations including Starbucks have seen their traffic and sales seriously hit, with the fast food chain also reporting heavy losses in the US.

No sign of any resolution

The fighting and devastation in the Gaza Strip continues, as the Israeli military retaliate against Hamas after their gunmen attacked southern Israel back on 7 October. They killed around 1,200 citizens and seized 253 hostages.

Around half remain captive, although at least 34 of them are presumed dead. It is also estimated that in advance of 33,000 people have been killed in Gaza in the 6 months since then.