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Israel-Hamas war takes a bite out of McDonald’s sales

Middle East customers, BDS movement targeted the restaurants because of perceived support for the Jewish state.

A kosher McDonald's restaurant in Ashkelon, Israel. Credit: Ingsoc via Wikimedia Commons.
A kosher McDonald's restaurant in Ashkelon, Israel. Credit: Ingsoc via Wikimedia Commons.

The Israel-Hamas war hurt fourth-quarter 2023 sales at McDonald’s as anti-Israel activists targeted the fast-food giant over perceived corporate support for the Jewish state.

Global same-store sales increased by 3.4% in the three months that ended on Dec. 31, 2023, well below the 4.7% rise expected by analysts polled by FactSet. Revenue at U.S. outlets grew in line with expectations, but at Middle Eastern franchises the growth was a paltry 0.7%.

McDonald’s president and CEO Chris Kempczinski said in January in a company message that “misinformation” around the Chicago-based brand’s position on the conflict led to several markets in the Middle East and elsewhere suffering “a meaningful business impact.”

The company drew anger from the anti-Israel BDS movement and Middle Eastern customers when the Israel franchise announced in October that it was providing free meals to soldiers.

In response, the Oman franchise announced humanitarian-aid efforts for the Hamas-ruled Gaza Strip. Oman does not recognize Israel.

“We abhor violence of any kind and firmly stand against hate speech, and we will always proudly open our doors to anyone,” Kempczinski said in a LinkedIn post.

Starbucks has also faced a backlash in the Middle East region for its perceived support for Israel, hurting sales there.

McDonald’s Malaysia in December sued the BDS movement for “false and defamatory statements” that have hurt its business, seeking damages of 6 million ringgit ($1.31 million).

Gerbang Alaf Restaurants Sdn Bhd, the licensee of McDonald’s in Malaysia, filed the suit after the BDS movement disseminated a series of social media posts purportedly linking the fast-food franchise to Israel’s “genocidal war against Palestinians in Gaza.”

A Dec. 19 writ of summons obtained by Reuters alleges that BDS Malaysia incited the public to boycott McDonald’s Malaysia, resulting in a decline in profit and job cuts, among other damages, due to closures and shortened operating hours.

McDonald’s Malaysia confirmed it filed the suit against BDS Malaysia to protect its “rights and interests,” the news agency reported.

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