McDonald’s and Starbucks say they have seen a significant hit to their international sales as a result of Israel’s war on Gaza.
“The ongoing impact of this war” on McDonald’s franchises in the Middle East “is disheartening and ill-founded,” McDonald’s CEO Chris Kempczinski told investors on a quarterly conference call Monday.
The company’s chief financial officer Ian Borden added that the war had “meaningfully impacted” the fast food giant’s bottom line in the region during the last quarter of 2023.
“We do not expect to see meaningful improvement until there is a resolution in the Middle East,” Borden added.
“Obviously the place that we’re seeing the most pronounced impact is in the Middle East,” CEO Kempczinski said, but acknowledged that customers are staying away in large Muslim markets including Malaysia and Indonesia.
Muslim consumers staying away
But the impact is being felt wherever there are significant Muslim communities.
“In a country, for example, like France that has a larger Muslim population, we are seeing some impact,” Kempczinski said. He noted that in France the drop in sales “depends very much on where the restaurant is located and if it’s in a Muslim area.”
Kempczinski declined to put a dollar figure on the company’s sales losses due to the war but told investors, “you can infer that the impact is meaningful.”
Palestine’s boycott, divestment and sanctions (BDS) movement has embraced the global boycotts of McDonald’s and other companies it says are “complicit in Israel’s genocidal war against 2.3 million Palestinians in Gaza.”The calls for a boycott of the global fast food giant took off in October after its Israeli franchise, McDonald’s Israel, announced it was donating thousands of free meals to Israeli soldiers taking part in the attack on Gaza.
McDonald’s Israel also angrily denied what it called “fake news” that it had made contributions to “Palestinian organizations.”Hoping to stave off a consumer backlash, franchises in several Arab countries distanced themselves from the Israeli branch, with some announcing donations for humanitarian aid to Gaza.
But those efforts appear to have failed, with customers staying away as an act of solidarity with Palestinians.
Consumers appear to understand that even when restaurants are owned by local franchisees in various countries, the profits they make are shared with the parent company.While the dramatic drop in sales experienced by McDonald’s may well be related to the moves by McDonald’s Israel, CEO Chris Kempczinski said that the “human tragedy” of the war “does weigh on brands like ours.”
In other words, refusing to spend money on products from American companies becomes a form of resistance and protest against American support for Israel’s genocide of Palestinians.
On a recent visit to Jordan, this writer noted a widespread boycott of other iconic American brands like Coca-Cola and Pepsi, with restaurants offering local products, and people choosing such goods or non-American alternatives. The popular boycott also targets major European brands like Nescafé and supermarket chain Carrefour.
Starbucks faces backlash
Another of those iconic companies is Starbucks, which this week announced it had also seen a drop in sales in the Middle East due to the war in Gaza.
But it is also seeing less traffic in its US stores due to consumer boycotts – both by supporters and opponents of Palestinian rights.
“The controversy kicked off when Starbucks Workers United, which represents hundreds of the chain’s unionized cafés, posted in support of Palestinians, leading to backlash from conservatives,” CNBC reported.
“Starbucks sought to distance itself from the tweet, which the union deleted, and sued Workers United for trademark infringement.”
“We disagree with the views expressed by Workers United,” the company said, explaining it sued the union because consumers and others were “mistakenly” tying those views to the company because of the similarity in the union’s name and logo to those of Starbucks.
In other words, Starbucks took active steps to dissociate itself from views in support of Palestinian rights in order to appease anti-Palestinian critics.
That cannot have helped Starbucks’ efforts to quell the widespread belief that it supports Israel.
“Our position remains unchanged. Starbucks stands for humanity. We condemn violence, the loss of innocent life and all hate and weaponized speech,” the coffee chain said in a December statement.
“Despite false statements spread through social media, we have no political agenda. We do not use our profits to fund any government or military operations anywhere – and never have,” Starbucks insisted.
Starbucks CEO Laxman Narasimhan pleaded with people to stop protesting at the company’s stores in cities around the world.
Whatever Starbucks’ policies may be, there is a strong perception that its longtime CEO Howard Schultz is a supporter of Israel.
Although he recently left the board and now holds the title of “founder and chairman emeritus,” as of May 2022 Schultz owned some 22 million Starbucks shares, worth roughly about $2 billion at current prices.
In 1998, Schultz received the Israel 50th Anniversary Tribute Award from Aish HaTorah, a Jewish pro-Israel organization.
Schultz and other honorees – who included then Senator Joe Biden – traveled to Jerusalem to meet Israeli Prime Minister Benjamin Netanyahu.
But as with McDonald’s and other US brands, what is now driving the anger at Starbucks is less these details and more their status as symbols of American global power – the power that enables Israel’s daily murder and maiming of hundreds of defenseless women, children and men in Gaza.