McDonald’s and Other US Brands Face Sales Slump Due to Boycotts Over Support for Israel
In recent months, several American brands, including McDonald’s, Starbucks, Coca-Cola, and Domino’s, have faced a significant sales slump due to boycotts and protests over their perceived support for Israel’s war on Gaza. These brands have been targeted by activists as part of the Boycott, Divestment, and Sanctions (BDS) campaign, which aims to put pressure on companies that are seen as friendly towards Israel.
McDonald’s, the fast-food giant, has been particularly affected by the boycotts. The company’s sales growth in the Middle East, China, and India stood at just 0.7 percent in the last quarter of 2023, well below expectations. This decline in sales can be attributed to the company’s Israel branch giving thousands of free meals to Israeli troops during the Gaza conflict. As a result, campaigners around the world have called for a boycott of McDonald’s products. The impact has been most pronounced in the Middle East, where at least 5 percent of McDonald’s franchises are registered.
To distance themselves from the controversy, franchises in Saudi Arabia, Oman, Kuwait, the United Arab Emirates, Jordan, Bahrain, and Turkey issued statements condemning the free food campaign in Israel and collectively pledged aid worth $3 million to Gaza. However, McDonald’s CEO Chris Kempczinski acknowledges that as long as the war persists, significant changes in sales are not expected. He expressed his concern over the human tragedy unfolding in Gaza and how it weighs on brands like McDonald’s.
Starbucks, another popular American brand, has also experienced a decline in sales due to the boycotts. The coffee chain recently slashed its annual sales forecast after witnessing a slump in growth. Starbucks CEO Laxman Narasimhan attributed this decline to a “significant impact on traffic and sales” in the Middle East, primarily caused by the war in Gaza. Protesters in the US have also campaigned against Starbucks, urging the company to take a stand against Israel. The trouble for Starbucks began when Starbucks Workers United, a union representing thousands of baristas, expressed support for Palestinians in a now-deleted post. Starbucks sued the union for trademark infringement, claiming that the post reflected “support for Hamas” and damaged the company’s reputation.
Coca-Cola, a long-standing player in the Middle East, has also found itself caught in the crossfire of conflict. The brand’s past affiliations with Israel, as well as its reputation as an American company, have led to calls for boycotts on social media. While there have been no recent triggers for these boycotts, Coke’s Turkey distributor reported a 22 percent drop in sales in the last quarter of 2023. In Egypt, the boycott of Coca-Cola and other American soft drinks has even led to a revival of a local soda brand, Spiro Spathis, which has seen a surge in sales.
Domino’s, a US-based pizza maker with franchises worldwide, is facing blowback as well. Social media posts have claimed that Domino’s also provided free food to Israeli soldiers, although there is no evidence to support these claims. In Asia, the brand’s same-store sales dipped by 8.9 percent in the second half of 2023, mainly due to its association with the US, an ally of Israel, according to a company official. Malaysians, who have been rallying against Israel’s war in Gaza, have called for an end to the conflict and have even banned Israeli-owned ships from their docks.
The impact of these boycotts on American brands in Asia and the Middle East cannot be ignored. The ongoing conflict in Gaza has fueled anti-Israel sentiments, leading to a decline in sales for these companies. As long as the war persists and tensions remain high, it is likely that these brands will continue to face challenges in these regions. The BDS campaign shows no signs of slowing down, and companies must carefully navigate their positions to avoid further damage to their reputations and sales figures.