update deskIsrael at War

McDonald’s to buy back Israel franchise

The U.S. chain had been subject to boycotts and protests since the local operator announced it would donate meals to IDF soldiers.

A McDonald's branch near Kibbutz Hagoshrim in the Upper Galilee, June 25, 2023. Photo by Michael Giladi/Flash90.
A McDonald's branch near Kibbutz Hagoshrim in the Upper Galilee, June 25, 2023. Photo by Michael Giladi/Flash90.

McDonald’s will buy back all of its 225 fast-food restaurants in Israel from a local franchise operator in a deal that will see more than 5,000 employees retain their jobs, the company announced on Thursday.

The U.S. chain had been subject to boycotts and protests since the local franchise, Alonyal Ltd., announced that it would be donating free meals to Israel Defense Forces soldiers fighting Hamas in the Gaza Strip.

McDonald’s Israel provided thousands of meals “to all those who are involved in the defense of the state, hospitals, and surrounding areas” in the weeks after Hamas’s Oct. 7 rampage across the northwestern Negev, in which some 1,200 people were murdered and thousands more wounded.

Some branches even started enforcing stricter kashrut standards to support IDF troops who only eat mehadrin-certified meat.

Branches in Saudi Arabia, Oman, Kuwait, the United Arab Emirates, Jordan and Turkey subsequently issued statements disassociating themselves from the Israeli franchise, with some pledging aid to Gaza.

“McDonald’s remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward,” Jo Sempels, the company’s president of International Developmental Licensed Markets, said in a press release on Thursday.

“We thank Alonyal Limited for building the McDonald’s business and brand in Israel over the past 30 years,” added Sempels.

The two companies did not disclose the terms of the transaction, but said they anticipated closing the deal “in the coming months.”

The Israel-Hamas war hurt McDonald’s global fourth-quarter 2023 sales 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 ending 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 0.7%.

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