SAEDNEWS: Both companies posted declines in global sales and profits this week, driven partly by “headwinds in the Middle East.”
According to SAEDNEWS, McDonald's and Starbucks, two of the world's largest fast-food chains, have reported declines in global sales and profits. Both companies attribute the decline to "headwinds" in the Middle East, specifically to boycotts by supporters of Palestine amid Israel's war in Gaza.
McDonald's reported a 12% decline in net profit, while Starbucks announced a 2% decline in sales in North American stores and a 7% decline in sales in the rest of the world. The companies pointed to currency fluctuations, slowdowns in the Chinese market, and consumer reaction to rising menu prices as contributing factors, but their CEOs cited the conflict in Gaza as a major issue.
The Palestinian-led Boycott, Divestment, Sanctions (BDS) movement has been credited with the decline in sales. The movement aims to oppose Israel's occupation and apartheid in Palestine. Although McDonald's is not officially targeted by BDS, its Israeli franchisee's decision to donate meals to Israeli military forces during the conflict sparked widespread outrage and boycott calls.
In response to the boycott, McDonald's CEO Chris Kempczinski cited the war in the Middle East as a major factor in the company's declining sales. He noted that several markets were being negatively impacted by the conflict, including countries with large Muslim populations such as France and those in Southeast Asia. Starbucks CEO Laxman Narasimhan also invoked the conflict, attributing sales declines in the Middle East, Southeast Asia, and parts of Europe to "misperceptions" about its brand.
The boycotts have been met with resistance from some employees of both companies. McDonald's Workers United, a union representing over 10,000 Starbucks employees, expressed solidarity with Palestine on social media, prompting Starbucks to sue the union for damaging its reputation. Calls to boycott McDonald's also began after its Israeli franchisee announced it would donate meals to Israeli military forces.
In response to the backlash, McDonald's Pakistani franchisee distanced itself from the issue, and the company was forced to buy back its 225 restaurants in Israel after sales tanked in the Middle East.
