McDonalds announced that it will repurchase all of its 225 franchised restaurants in Israel, following a decline in business due to boycotts and protests related to the Israel-Hamas conflict in the Middle East.
The agreement, revealed on Thursday, will bring all stores under the direct management of McDonald’s Corporation. The terms of the deal were not disclosed, but the chain’s 5,000 employees in Israel will retain their jobs.
This move underscores the increasing political divide faced by multinational corporations during times of conflict, with activists and companies engaging in claims and counterclaims regarding disinformation campaigns.
McDonald’s business in the region suffered when the Israeli franchises, operated by Alonyal Limited, started providing meals to Israeli soldiers after the Hamas-led attacks on Oct. 7.
These donations, initially described by Alonyal as a gesture of solidarity to support the military and hospital workers, triggered boycotts in neighboring countries. This led McDonald’s franchises in Jordan, Oman, Saudi Arabia, Turkey, and the United Arab Emirates to distance themselves from the Israeli franchise.
In Kuwait and Qatar, McDonald’s franchise owners also pledged financial support for relief efforts in Gaza. The #BoycottMcDonalds hashtag gained traction in the Middle East and other predominantly Muslim countries, accusing the fast-food giant of “supporting genocide” in Gaza.
Omri Padan, the Israeli businessman managing Alonyal, stated on Thursday that his company had successfully expanded McDonald’s franchises into Israel’s leading restaurant chain over three decades.
American companies and franchises operating in the region have experienced financial setbacks during the ongoing conflict. Starbucks franchise operators in the Middle East and Southeast Asia reported significant business losses due to boycotts, resulting in employee layoffs.
Both Starbucks and McDonald’s have faced accusations of supporting Israel’s actions against Hamas, leading to calls for boycotts despite issuing statements denying such claims.
In a social media post in January, McDonald’s CEO Chris Kempczinski acknowledged the business impact in several Middle Eastern markets due to the conflict and misinformation affecting brands like McDonald’s.
Mr. Kempczinski highlighted the challenges faced by Mr. Padan’s Israeli franchises, which were targeted by a disinformation campaign surrounding their stance in the Israel-Hamas conflict.
During a call with analysts in February, Mr. Kempczinski expressed concerns about muted growth in international franchised restaurants, particularly in majority-Muslim countries and regions with significant Muslim populations.
The CEO emphasized the need to wait for a resolution to the conflict before making any significant plans, as the ongoing situation continues to impact businesses and brands like McDonald’s.
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