McDonald’s to Repurchase Israeli Outlets Amid Sales Slump
In response to a downturn in sales triggered by a perceived alignment with Israel, McDonald’s has announced plans to reclaim all of its restaurants in Israel. The fast-food giant faced backlash after its Israeli franchise distributed complimentary meals to Israeli soldiers, prompting widespread criticism and a boycott of the brand.
Acknowledging the adverse impact of the Israel-Hamas conflict on its business, McDonald’s disclosed a deal with franchisee Alonyal to repurchase 225 outlets. This move comes after protests and declining sales in regions like the Middle East, Indonesia, and France.
Alonyal, led by CEO Omri Padan, has overseen McDonald’s operations in Israel for over three decades under the franchise system. The boycott originated in Muslim-majority countries such as Kuwait, Malaysia, and Pakistan, further exacerbated by social media posts highlighting the franchise’s support for Israeli forces during the conflict.
McDonald’s emphasised its commitment to the Israeli market while expressing gratitude to Alonyal for its contributions. Despite the upheaval, the company reassured employees of continuity in operations and employment terms.
CEO Chris Kempczinski attributed the sales setback to misinformation but acknowledged its financial implications. The company’s quarterly sales target was missed for the first time in nearly four years, prompting a reevaluation of its market strategies.
By reacquiring its Israeli operations, McDonald’s aims to restore its reputation in the Middle East and meet sales objectives. The move underscores the company’s reliance on local franchise operators globally while navigating geopolitical tensions impacting its business.
The conflict between Israel and Hamas, which began in October with attacks on southern Israel, has led to devastating consequences in Gaza, with thousands of casualties reported. As McDonald’s seeks to navigate these complex dynamics, its decision to reclaim its Israeli outlets reflects a strategic pivot in response to geopolitical pressures impacting its global operations.
