McDonald's to Buy Back Israeli Outlets Amid Boycott Fallout
Popular fast-food chain McDonald's has decided to repurchase all of its restaurants in Israel after facing a boycott due to the Israel-Hamas conflict.
The company announced that it has reached an agreement with its franchisee Alonyal to take back 225 outlets spread across the country, where around 5,000 people are employed.
Criticism arose when Alonyal began offering thousands of free meals to Israeli soldiers, leading to a decline in sales since the conflict began in October.
On Thursday, McDonald's confirmed the signing of a deal with Alonyal, which has managed the chain of Golden Arches in Israel for over three decades.
McDonald's assured that the restaurants, their operations, and employees will continue as usual under similar conditions, emphasizing their ongoing dedication to the Israeli market. However, specific details of the sale were not disclosed.
The boycott was initiated after several Muslim-majority countries, including Kuwait, Malaysia, and Pakistan, distanced themselves from the brand, citing its perceived support for Israel.
Global protests followed as the grassroots boycott spread beyond the Middle East.
In January, McDonald's acknowledged that the conflict significantly impacted its business, with sales suffering in countries like France, Indonesia, and Malaysia, although the Middle East region was hit the hardest.
CEO Chris Kempczinski attributed the backlash to “misinformation,” but it still affected the company's financial performance, causing it to miss its first quarterly sales target in nearly four years.
McDonald's expressed disappointment in the “disheartening and ill-founded” boycott. The company relies on numerous independent businesses to own and operate most of its 40,000+ stores worldwide, with around 5% located in the Middle East.
Mr. Kempczinski stated, “In every country where we operate, including in Muslim countries, McDonald's is proudly represented by local owner operators.”
Taking back control of the Israeli business is a strategic move for the company, aiming to rebuild its reputation in the Middle East and achieve its sales targets.
The ongoing conflict in Gaza, which began after Hamas-led gunmen attacked southern Israel on October 7th, resulting in about 1,200 casualties and the seizure of 253 hostages, has caused significant devastation.
Currently, around 130 hostages remain in captivity, with at least 34 presumed dead.
According to Gaza's Hamas-run health ministry, more than 33,000 people have lost their lives since the conflict began.
McDonald's is aware that improvement in these markets might not be immediate while the conflict continues. “As long as this war is ongoing… we're not expecting to see any significant improvement [in these markets],” stated the McDonald's CEO.
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