Fast Food Giant Seeks to Restore Market Presence in the Middle East After Controversial Support for Israel
McDonald’s Corporation has revealed plans to repurchase all of its Israeli restaurants following a significant decline in sales attributed to a boycott against the brand over its perceived backing of Israel.
The multinational fast food chain faced criticism after its Israeli franchise distributed thousands of complimentary meals to Israeli soldiers, drawing ire from various quarters.
In response to the adverse impact on its business, McDonald’s has struck a deal with franchisee Alonyal to reclaim control of 225 outlets in Israel.
The company cited the Israel-Hamas conflict in January as a key factor affecting its operations in the region, leading to widespread protests and a noticeable slump in sales across several countries including the Middle East, Indonesia, and France.
Alonyal, headed by CEO Omri Padan, has overseen McDonald’s operations in Israel for over three decades under a franchise agreement typical of the company’s business model.
The decision to repurchase the restaurants comes amid mounting pressure fueled by boycott movements, particularly in Muslim-majority nations like Kuwait, Malaysia, and Pakistan, which distanced themselves from McDonald’s due to its perceived support for Israel.
The controversy erupted last October following social media posts by McDonald’s franchisee in Israel, announcing donations of meals to Israeli military units, police, hospitals, and residents during the conflict with Hamas.
The backlash extended beyond the Middle East, impacting McDonald’s businesses in France, Indonesia, and Malaysia, prompting vocal protests and a dent in financial performance.
In a statement, McDonald’s reaffirmed its commitment to the Israeli market and expressed gratitude to Alonyal for its contributions to the brand’s presence in Israel.
The buyback deal ensures the retention of restaurants, operations, and employees in Israel under equivalent terms, although specifics of the transaction remain undisclosed. McDonald’s employs approximately 5,000 people in Israel under Alonyal’s management.
CEO Chris Kempczinski previously attributed the sales downturn to “misinformation,” emphasizing the company’s reliance on local franchise operators worldwide.
With hopes of rebuilding its reputation in the Middle East, McDonald’s aims to leverage the buyback strategy to regain market trust and meet its sales targets.
The move comes amidst ongoing devastation in the Gaza Strip following military operations initiated by Israel in response to attacks by Hamas-led gunmen last October, underscoring the complex geopolitical backdrop surrounding the fast food giant’s operations in the region.
