McDonald’s has made a decision amidst ongoing boycotts and protests, acquiring all 225 franchise restaurants in Israel. This move comes of controversies surrounding its Israeli franchisee, Alonyal, which sparked global outrage due to its support for the Israeli military during the Gaza conflict.
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The decision to acquire the Israeli franchises follows a period of backlash against McDonald’s after Alonyal’s announcement of providing free meals to the Israeli military amid the Gaza war.
This move triggered boycotts and protests, leading to impact on McDonald’s sales, particularly in the Middle East, Malaysia, Indonesia, and even in the US.
The financial repercussions of the boycott were evident in McDonald’s fourth-quarter sales, which disappointed analysts with a 0.7 percent fall in franchised restaurants outside the US.
McDonald’s CEO, Chris Kempczinski, acknowledged a meaningful business impact in various markets due to the Israel-Hamas conflict.
McDonald’s operates on a franchise model, where local operators have autonomy in their operations. This model has been in McDonald’s global expansion, with over 41,000 restaurants worldwide.
However, it also means that the company cannot control individual franchisees’ actions or statements. McDonald’s CEO has reiterated the company’s commitment to neutrality, addressing that local owner-operators represent McDonald’s in every country of operation.
Despite the controversy surrounding Alonyal’s actions, McDonald’s has ensured that all 5,000 employees will retain their jobs under the new ownership.
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This move is to maintain a positive employee and customer experience in the Israeli market. McDonald’s is not the only Western brand facing criticism and boycotts over perceived political stances.
Starbucks, Burger King, KFC, and Pizza Hut have also been targeted by activists. Starbucks, for instance, has denied allegations of supporting the Israeli government.
McDonald’s CEO Chris Kempczinski addressed the company’s commitment to the Israeli market while expressing concern over the impact of the conflict.
Despite facing a business downturn, McDonald’s reiterated its dedication to ensuring a positive experience for both employees and customers in Israel.
The acquisition deal between McDonald’s and Alonyal encompasses all 225 franchise restaurants in Israel, with the terms of the transaction undisclosed.
McDonald’s assures the retention of operations, employees, and customer service standards. The boycotts, spurred by Alonyal’s actions, reverberated beyond Israel, affecting McDonald’s sales in the Middle East, Indonesia, France, and other regions with large Muslim populations.
The company’s financial performance suffered, with missed sales targets and a decline in comparable sales outside the United States.
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