The McDonald’s boycott has emerged as an issue within the context of the ongoing Israel-Hamas conflict, with attention drawn to the fast food chain’s perceived support for Israel. The boycotts began in 2023 and have particularly resonated in Muslim-majority countries and among consumers who oppose Israeli military actions (as well as the illegal occupation of various territories of Palestine and Syria), which many critics have called ethnic cleansing and genocide.
Here, you’ll gain a complete understanding of the McDonald’s boycott, supported by well-sourced facts and insights provided by Business2Community. By examining the financial implications, such as Wall Street’s forecasts and same-store sales trends, we’ll delve into the meaningful business impact of these consumer-led movements.
The McDonald’s Boycott – Key Facts
- The boycott was triggered by McDonald’s perceived pro-Israeli stance amidst the ongoing Israel-Hamas conflict, particularly following their decision to buy back franchises in Israel.
- The backlash included protests in various regions, particularly in Muslim-majority countries, where consumers objected to the company’s actions, leading to a notable decline in sales.
- While McDonald’s revenue grew by 5% to $6.17 billion in Q1 2024, the company anticipated continued challenges, with the boycott actions persisting.
The Story of the McDonald’s Boycott
The McDonald’s boycott emerged as a pivotal response against the fast food chain’s perceived support for the Israeli military during the ongoing Israel-Hamas conflict. This marked the first instance since 2020 that quarterly same-store sales in the international franchised markets experienced a decline.
The Origins of the Boycott
In October 2023, McDonald’s faced backlash from some of its franchises in Muslim-majority countries after the company’s Israeli restaurants provided free meals to Israeli military personnel. On social media, McDonald’s Israel announced that it had distributed thousands of these free meals to Israel Defense Forces personnel.
The fast food chain stated that the meals were for “all those who are involved in the defence of the state, hospitals, and surrounding areas”.
McDonald's announced that it donated free meals to killer Israeli soldiers.
With that being announced I have the right to boycott McDonald's, your choice is with you#جمعة_طوفان_الأقصى pic.twitter.com/07ZkpGjeoj
— Umair (@Dr_MianUmair1) October 13, 2023
The move highlighted the complex regional politics that global corporations navigate during conflicts.
This decision drew criticism from McDonald’s franchises in Saudi Arabia, Oman, Kuwait, the UAE, Jordan, and Turkey, which issued statements disavowing the action and in some cases, pledged support to Gaza.
For context, the peer-reviewed medical Journal The Lancet published a study that contends that a low estimate for the death toll of Israel’s brutal attack on Gaza (including indirect deaths due to starvation, lack of medical care, sanitation, etc.) is about 186,000 Palestinians, amounting to 8% of the entire population of the strip. The Gaza Ministry of Health keeps a running total of confirmed and identified deaths as well which is at about 40,000 at the time of writing (including over 16,500 children).
Statement from McDonald’s Oman pic.twitter.com/SzKz7lhmgk
— McDonald’s Oman (@Mcdonaldsoman) October 14, 2023
McDonald’s emphasized that the decision to provide meals was made independently by the Israeli franchise and did not involve global McDonald’s.
The company’s US headquarters confirmed that the Israeli franchise operated independently, reflecting how local franchisees often engage with their communities in response to local events.
McDonald’s Boycott Response
In response to the boycott and a slump in global sales, McDonald’s decided to buy back all 225 of its franchises in Israel, previously operated by the franchise company Alonyal. The move was made to manage the situation directly, as McDonald’s usually operates through locally owned franchises. McDonalds is more of a real estate company than anything at this point, letting franchisees run most of its locations across the world. However, this controversy was apparently severe enough for McDonalds to take total control over these franchises.
Omri Padan, CEO of Alonyal, had been at the center of several controversies related to the Israeli-Palestinian conflict.
In 2013, he refused to open a McDonald’s branch in the West Bank settlement of Ariel, citing a policy of avoiding occupied territories. Padan is also the founder of Peace Now, an organization opposing Israeli settlements, though he is no longer a member.
McDonald’s winning a tender at Ben-Gurion Airport in 2019 also reignited protests due to Padan’s stance on settlements.
The boycott has been supported by several Muslim-majority countries, including Kuwait, Malaysia, and Pakistan, who distanced themselves from McDonald’s due to its perceived support for Israel. It has impacted McDonald’s sales in regions like the Middle East, China, and India.
The conflict has led to minimal growth for McDonald’s of 0.7% in the last quarter of 2023, far below expectations.
Despite the controversies, McDonald’s reaffirmed its commitment to the Israeli market and expressed optimism about the future. The decision to buy back the Israeli franchises is seen as an attempt to regain control of its brand image.
However, experts question whether this will effectively address the reputational damage. The boycott and McDonald’s actions continue to draw both criticism and praise, with ongoing debates about the company’s political and ethical stances.
Impact on International Sales
As a result of the controversy, McDonald’s experienced a 0.2% decline in same-store sales in its international franchised markets during the first quarter of 2024.
This was the first time since 2020 that the had company seen a drop in quarterly same-store sales in this segment.
The boycotts in Muslim countries that began in October 2023 put pressure on McDonald’s international performance, reflecting the broader impact of geopolitical conflicts on global business operations.
Despite the efforts to manage the fallout by purchasing the 225 McDonald’s franchises in Israel, the company has anticipated that the impact of the boycotts will persist until the conflict is resolved.
While McDonald’s didn’t foresee any immediate improvement in the situation, the company has continued to monitor the market’s response and adjusted its strategies accordingly.
CEO Kris Kempczinski mentioned that while the impact of the boycotts did not seem to worsen:
McDonald’s is not expecting to see any meaningful improvement in the impact on that until the war is over.
Despite these challenges, McDonald’s revenue grew by 5% to $6.17 billion in the first quarter of 2024, aligning with Wall Street’s forecast.
However, net income rose by 7% to $1.93 billion, slightly missing the earnings forecast of $2.72 per share. McDonald’s shares remained stable during the trading period.
The Backlash Against Global Brands
The ongoing Israel-Hamas conflict has sparked widespread boycotts against other major corporations like Starbucks and Domino’s, driven primarily by social media. Despite companies’ attempts to distance themselves from the conflict, their perceived affiliations have led to backlash, particularly from pro-Palestinian groups.
In the United States, protests have taken place outside McDonald’s and Burger King locations, with demonstrators calling for a ceasefire and expressing opposition to the US government’s support for Israel.
@itsamalakel THERE IS NO GOING BACK #boycottmcdonalds #boycottstarbucks
These on-the-ground actions have been fueled by a steady stream of social media campaigns that urge consumers to boycott businesses seen as supporting Israel.
TikTok has been a platform for these movements. Hashtags like “#boycottstarbucks” and “#boycottmcdonalds” have garnered millions of views, illustrating the widespread support for these boycotts. Footage of heartbreaking carnage in Gaza and various Israeli war crimes have spread like wildfire on TikTok and other social media platforms like X, pushing many Americans to boycott McDonalds and other Israel-supporting corporations.
Despite official statements from US fast food chain companies clarifying that they do not support or donate to Israel’s government or military, the calls for boycotts have persisted.
Starbucks faced backlash after its union, Starbucks Workers United, posted a “Solidarity with Palestine” message on social media. Although the post was unauthorized and quickly deleted, the incident further fueled boycott efforts. Starbucks has since taken legal action against the union, adding to the controversy.
In Turkey and Indonesia, the coffee chain has experienced declines in business, with Turkish youth activists staging protests and Indonesian locations reducing operating hours due to low patronage.
Starbucks’ operations in Egypt and the broader Middle East have also struggled, with Alshaya Group closing numerous stores and laying off hundreds of employees.
Domino’s Pizza has also been impacted by the boycott movement. The chain saw its shares drop by 30%, with the company attributing poor sales in Asia to anti-American sentiment. Although Domino’s reported strong sales in the US, its performance has varied globally.
Burger King also faced attacks and protests in Turkey, where a man assaulted an employee over alleged support for Israel, and another vandalized a store. The ongoing boycott has exacerbated these issues, reflecting the broader trend of anti-Israel sentiment affecting global brands.
Despite the online fervor, there is limited evidence to suggest that these boycotts have significantly impacted the financial performance of either company. While some reports indicate a dip in sales in certain regions, overall earnings remain strong.
However, those involved in the boycotts view them as part of a broader, long-term movement rather than a temporary trend, aiming to create lasting change in corporate behaviors related to geopolitical conflicts.
The Consequences of the McDonald’s Boycott
The boycott against McDonald’s has far-reaching implications, affecting various stakeholders, including the corporation, franchisees, employees, and even local markets in Muslim-majority countries.
As international franchised markets faced scrutiny, McDonald’s remained committed to addressing the concerns stemming from the boycott campaigns that began in October 2023. CEO Chris Kempczinski acknowledged the challenges posed by the ongoing Israel-Hamas war, particularly its impact on Wall Street’s estimates for the company.
While McDonald’s reported a growth in revenue, the turmoil has created instability in its perceived reputation, especially among consumers in Muslim countries markets, who view the fast-food chain’s actions as pro-Israeli.
Local owner-operators of Israeli franchises have been working to navigate this complex environment, trying to adhere to the expectations of both the corporate structure and the sentiments of their communities. However, despite efforts to maintain a positive image, price hikes reported during the January to March period have further strained relationships with consumers in affected regions.
The situation illustrates the complexities faced by global brands like McDonald’s as they confront the intertwined effects of geopolitical conflicts, customer sentiment, and corporate responsibility in a dynamic and often volatile market landscape.
What Can We Learn From the McDonald’s Boycott?
The situation surrounding the McDonald’s boycott serves as a crucial lesson for business leaders, particularly those operating in international franchised markets, including Muslim-majority countries.
It highlights the significance of understanding local sentiments and the potential repercussions of perceived pro-Israeli stances. The backlash faced by McDonald’s Corporation illustrates that even established global brands must navigate the complexities of geopolitical conflicts with care.
As demonstrated, Wall Street’s forecasts became increasingly uncertain as the company was forced to address consumer inquiries about alleged financial ties to Israeli soldiers. Although McDonald’s remains committed to maintaining its presence in these sensitive markets, the shifting landscape demands a more nuanced approach, particularly during turbulent times.
The emphasis on ensuring a positive employee experience whilst managing customer relations is more critical than ever.
Initiatives like buying back 225 Israeli restaurants helped streamline operations and maintain brand control, but a move like this must be balanced with financial sustainability, especially as systemwide sales were impacted during the January to March period.
As the boycott shows, the consequences of political sentiments can reverberate through a company’s sales and overall public image, urging fast-food chains and other corporations to foster transparency and responsiveness in their corporate strategies to mitigate backlash and maintain their market positions.