Photo by Jurji Kenda on Unsplash
McDonald’s Middle East Troubles: Sales Stumble From Boycotts
February 6, 2024
McDonald’s has been struggling a bit lately, particularly in the Middle East. The fast-food giant’s quarterly report from 2023 showed that its sales are growing at a snail’s pace in this region. In its licensed markets, including most Middle East locations, the sales grew by a meager 0.7% in the last quarter.
This sluggish growth is largely due to the fraught conflict between Israel and the Palestinian group Hamas. McDonald’s admitted that the war is definitely casting a shadow over its business in the region. In stark contrast, the company reported a 3.4% overall sales growth. The U.S. branches and other international ones have done even better, notching up over 4% growth.
Just a year ago, McDonald’s licensed markets were its star performers. They were growing at a booming 16%, according to CNN Business. But now, the Middle East conflict is hitting them hard. Malaysia and Indonesia, both primarily Muslim countries, are also feeling the impact.
CEO Chris Kempczinski doesn’t see much silver lining. As long as hostilities continue, he sees no chance of a significant turnaround. “It’s a human tragedy what’s going on, and I think that that does weigh on brands like ours,” he said.
To add fuel to the fire, McDonald’s Israel further complicated the situation. After Hamas’s sudden attack on southern Israel, McDonald’s Israel handed out thousands of free meals to Israeli forces and civilians. This inevitably led to calls for boycotts against the company. The onslaught on Gaza has resulted in more than 27,400 casualties since last October, says the enclave’s Health Ministry, and this adds to the outrage.
Franchise owners from the Middle East and Asia voiced their opposition to McDonald’s Israel’s move, leading to more controversies. Kempczinski called the backlash “disheartening and ill-founded.” He asserted that McDonald’s is for everyone and will always welcome all with open arms.
McDonald’s is not alone in facing boycotts over Middle East issues. Starbucks and Coca-Cola are also in hot waters, accused of supporting Israel’s war in Gaza. Starbucks recently had to cut down its sales forecast due to weakened spending in China and several other markets.
All these issues took a toll on McDonald’s shares, which fell by 3.7% on Monday.
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