McDonald’s Misses Sales Target Amid Boycott Over Israel Support
McDonald’s, the global fast food chain, has reported its first quarterly sales miss in nearly four years. The company attributes this setback to weak growth in its international business division, which has been affected by a boycott led by anti-Israeli campaigners. The conflict between Israel and Gaza has “meaningfully impacted” performance in some overseas markets, resulting in lower-than-expected sales growth.
The Israel-Gaza conflict has sparked protests and boycotts against several Western corporations, including McDonald’s, Starbucks, and Coca Cola. These companies have faced criticism for their perceived support of Israel. McDonald’s CEO, Chris Kempczinski, acknowledged the impact of the conflict and blamed it on “misinformation.” He called the backlash “disheartening and ill-founded.”
In the fourth quarter of 2023, McDonald’s experienced sales growth of only 0.7% in the branch that includes the Middle East, China, and India. This figure falls far below market expectations and has had a significant impact on the company’s business in Malaysia, Indonesia, and France. The Middle East has been particularly affected, with franchise owners in Muslim-majority countries such as Kuwait, Malaysia, and Pakistan distancing themselves from the brand.
The controversy surrounding McDonald’s began when its Israel-based franchise announced that it had provided thousands of free meals to members of the Israeli military. This move sparked outrage among those angered by Israel’s military response in Gaza, leading to calls for a boycott of the brand. Approximately 5% of McDonald’s outlets are located in the Middle East.
As a result of the boycott and protests, McDonald’s shares fell by about 4% after the announcement of the sales miss. The company relies on a franchise system, with independent businesses owning and operating most of its 40,000 stores worldwide. The impact of the conflict on sales is expected to continue as long as the war persists.
Despite the setback, McDonald’s global sales still grew by just under 4% in the fourth quarter. The corporation experienced its strongest sales growth in the United States, benefiting from price inflation. However, its US business fell short of expected sales growth, as customers with lower incomes ordered less food and opted for cheaper items on the menu. McDonald’s also saw growth in sales in the UK, Germany, and Canada.
Last week, Starbucks also cut its annual sales forecast, citing fewer customers visiting stores in the Middle East. Both McDonald’s and Starbucks expressed their support for the families and communities impacted by the conflict and emphasized their commitment to supporting their employees and local communities.
In conclusion, McDonald’s has faced a significant sales miss due to weak growth in its international business division, primarily caused by a boycott led by anti-Israeli campaigners. The Israel-Gaza conflict has “meaningfully impacted” sales in some overseas markets. Despite this setback, McDonald’s experienced overall sales growth globally, with its strongest performance in the United States. The company remains committed to supporting its employees and local communities amidst the ongoing conflict.
