CEO Chris Kempinski addresses fallout from Israel-Gaza tension, Starbucks also impacted

McDonald’s faces a substantial business decline due to a boycott by customers in the Middle East and other regions. CEO Chris Kempczinski, in a LinkedIn post, acknowledged the business impact, attributing it to perceived support for Israel amid the Israel-Gaza war tension and labelling it as “misinformation.” Starbucks has also felt the repercussions of this situation.

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Kempczinski specifically highlighted the adverse effects on McDonald’s business in various Middle Eastern markets, emphasizing that the company is represented by local owner-operators in every country, including those with a Muslim-majority population. McDonald’s, with over 40,000 global stores, has approximately 5% of its outlets located in the Middle East.

The controversy originated from McDonald’s Israel providing free meals to the Israeli military after an attack by Hamas on October 7. This triggered grassroots calls for boycotts in Muslim-majority nations such as Kuwait, Malaysia, and Pakistan.

Tensions heightened when the pro-Palestinian Boycott, Divestment and Sanctions (BDS) officially called for a boycott of McDonald’s. McDonald’s Malaysia, supported by a Saudi firm, filed a $1.3 million lawsuit against the Malaysia BDS group, alleging “false and defamatory statements” impacting its business. BDS urged McDonald’s to sever ties with its Israeli franchisee in Malaysia, threatening sustained grassroots boycott efforts.

While McDonald’s refrained from commenting on the lawsuit, the company reiterated its stance against violence and hate speech in Kempczinski’s post, expressing a commitment to welcoming everyone.

As a fast-food giant relying on independent businesses to operate its stores, McDonald’s finds itself entangled in geopolitical tensions, navigating the challenges of a boycott fueled by perceptions of its connection to the Israel-Gaza conflict.