The Israel-Hamas conflict has had far-reaching impacts, even extending to global restaurant chains McDonald’s and Starbucks. Both companies reported a decline in sales at the end of last year due to the war, which is expected to continue affecting their businesses in the future.
McDonald’s saw a nearly 4% drop in its stock after revealing that a sales slowdown in the Middle East contributed to its fourth-quarter revenue miss. Similarly, Starbucks’ stock fell approximately 2% after the company announced that the war had impacted its U.S. sales in the final three months of the year.
These two restaurant giants are among the largest U.S. companies to acknowledge the negative effects of the Middle East conflict on their sales. It remains uncertain whether other restaurant companies will also experience a downturn as a result.
Starbucks faced additional challenges as it became a target of boycotts due to a tweet posted by Starbucks Workers United, a union representing hundreds of the chain’s cafes. The tweet expressed support for Palestinians, leading to backlash from conservatives. Starbucks distanced itself from the tweet and sued Workers United for trademark infringement. CEO Laxman Narasimhan highlighted that the boycotts had not only impacted sales in the Middle East but also affected U.S. cafes, leading to a decline in foot traffic.
McDonald’s, on the other hand, witnessed a slip in fourth-quarter sales in the Middle East after its Israeli licensee offered discounts to soldiers. This move prompted some customers who opposed Israel’s offensive in Gaza to boycott the fast-food chain. McDonald’s expects its Middle Eastern sales to recover only once the war comes to an end.
While McDonald’s noted weaker sales in majority Muslim countries such as Malaysia and Indonesia, as well as in France with its large Muslim population, there were no reported effects on its U.S. sales.
In addition to McDonald’s and Starbucks, activists have called for boycotts of other major fast-food chains, including Domino’s Pizza, Papa John’s, Burger King (owned by Restaurant Brands International), and Pizza Hut (owned by Yum Brands). The impact on these companies’ sales remains to be seen, with Yum Brands and Restaurant Brands set to release their quarterly earnings soon, and Domino’s and Papa John’s expected to do so at the end of the month.
The Israel-Hamas conflict is not only affecting the lives of people in the region but also reverberating across global businesses. McDonald’s and Starbucks are just two examples of how current geopolitical events can have significant economic consequences. As the war continues, it remains to be seen how other companies will navigate these challenges and whether their sales will also be impacted.
