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McDonald’s and Starbucks sales dented by Israel-Hamas war; recovery isn’t expected anytime soon
McDonald's & Starbucks, the two major American restaurant chains, have blamed Israel-Hamas war for a negative impact on their sales at the end of the last year.
McDonald's and Starbucks, the two major American restaurant chains, have blamed the Israel-Hamas war for a negative impact on their sales at the end of the last year.
McDonald's shares dropped by about 4% on Monday after the company revealed that its fourth-quarter revenue shortfall was partly caused by a slowdown in Middle Eastern sales. Starbucks' stocks saw a drop by almost 2% since Tuesday, when the company revealed the ongoing conflict also affected its US sales in the final three months of the year.
McDonald's has failed to meet a significant sales goal, primarily because customers have boycotted the company over its perceived support for Israel.
Earlier, McDonald's admitted the conflict's effects, blaming "misinformation".
A number of Western companies, such as McDonald's, Starbucks and Coca-Cola, have faced boycotts and demonstrations by anti-Israel protestors.
Also Read: Starbucks employees at hundreds of US stores walkout on 'Red Cup' day
McDonald's doesn't expect its Middle East sales to recover
Meanwhile, Chris Kempczinski, the CEO of McDonald's, stated that the war had a "disheartening" impact on sales in countries with a Muslim majority, such Malaysia and Indonesia, as well as in the Middle East.
“So long as this conflict, this war, is going on … we’re not expecting to see any significant improvement in this,” Kempczinski said in a statement on Monday, as per CNN Business.
“It’s a human tragedy, what’s going on, and I think that does weigh on brands like ours.”
McDonald's has over 40,000 stores worldwide, most of which are owned and operated by thousands of independent businesses under a franchise system. In the Middle East, there are about 5% of its stores.
Also Read: McDonald’s breakneck expansion plan in 2024. Location? China
Starbucks sales decline in Middle East & the US
After Starbucks Workers United, which is responsible for hundreds of the chain's unionized cafés, voiced its support for Palestinians, Starbucks faced criticism from conservatives and became the subject of boycotts. Starbucks sued Workers United for trademark infringement in an attempt to disassociate itself from the tweet.
Starbucks CEO Laxman Narasimhan stated on Tuesday that the company's sales not only witness decline in Middle East but also in its US cafes, reported CNBC. The chain's fiscal first quarter ended December 31 saw a 5% increase in same-store revenues in the United States, although foot traffic plummeted.
Customers who visited infrequently were the main cause of the U.S. foot traffic lag, according to Narasimhan. In an effort to boost demand, Starbucks is planning to introduce new beverages
In contrast to Starbucks, McDonald's did not report any impact on its US sales.
In addition to McDonald's and Starbucks, some activists have demanded boycotts of Domino's Pizza, Papa John's, Burger King from Restaurant Brands International, and Pizza Hut from Yum Brands.
