McDonald’s has admitted it has seen a significant hit to its international sales as a result of Israel’s war on Gaza.
American fast food brands – including McDonald’s, Starbucks & Coca-Cola – are viewed by many Muslims globally as being both American and pro-Israel.
Last October, McDonald’s in Israel angered its neighbours by giving free food to Israeli soldiers and hospitals. Read B&T’s reporting of that HERE.
“The ongoing impact of this war” on McDonald’s franchises in the Middle East “is disheartening and ill-founded,” the burger giant’s CEO Chris Kempczinski told investors on a quarterly conference call Monday.
Kempczinski added: “Obviously the place that we’re seeing the most pronounced impact is in the Middle East”, but added customers were staying away in large Muslim markets including Malaysia and Indonesia.
“In a country, for example, like France that has a larger Muslim population, we are seeing some impact,” Kempczinski said. He noted that in France the drop in sales “depends very much on where the restaurant is located and if it’s in a Muslim area.”
The Macca’s supremo did not put a dollar figure on the company’s sales losses due to the war but told investors, “You can infer that the impact is meaningful.”
In Q4 2023, the fast food brand missed its sales targets for the first time in four years, recording growth of 0.7 per cent, – well below 5.5 per cent expectations – in the Middle East, China and India. Shares fell four per cent on the announcement.
The Middle East doesn’t make up a huge part of its overall business. McDonald’s for the most part licenses its brand to independent companies in the region, and McDonald’s said it provided some financial assistance in the form of royalty relief or deferred cash collection.
McDonald’s CFO Ian Borden said that the war had “meaningfully impacted” on the fast food giant’s bottom line in the region during the last quarter of 2023.
“We do not expect to see meaningful improvement until there is a resolution in the Middle East,” Borden said.
A statement from McDonald’s added that its thoughts were with the families and communities impacted by the conflict in the region. It said it would “continue to stay focused on supporting our people and the local communities in which we operate”.
