McDonald's took the decision to buy its Israel franchise, CNBC reports, due to the fallout from the pro-Palestinian boycott against the fast food chain. McDonald's sales have fallen substantially since the start of the Israel-Hamas war in October following a global consumer boycott, especially in Arab and Muslim countries, alleging that the fast food chain has been supporting Israel's war effort, a claim the company strenuously denies.
At the heart of the dispute was Israeli franchise owner Omri Padan's decision to distribute free meals to Israeli soldiers after the October 7 atrocities.
"Dismayed by the disinformation"
In January, McDonald's CEO Chris Kempczinski spoke about "meaningful business impact" on the chain's Middle East market and in Muslim countries beyond the region such as Malaysia and Indonesia, as a result of the war, and because of what he termed "associated misinformation"
"We are dismayed by the disinformation and inaccurate reports regarding our position in response to the conflict in the Middle East," McDonald’s Corp. said in a statement last November.
"McDonald’s Corporation is not funding or supporting any governments involved in this conflict, and any actions from our local Developmental Licensee business partners were made independently without McDonalds’ content or approval."
CNBC reported that McDonald's distancing itself from the actions of its Israeli franchisee did not help and in several Arab countries sales fell by 50%-90% month-on-month after the start of the boycott. In Lebanon demonstrators attacked and wrecked McDonald's outlets and crowds of pro-Palestinian demonstrators in London surrounded branches of the fast-food chain and shouted "Shame on you."
McDonald's share price is down 10% since the start of the year and 5.5% over the past 12 months.
Monica Marks, a professor of Middle East politics at NYU Abu Dhabi, wrote in a post on X that the purchase by McDonald’s will "give it more control over its brand, after losses linked to actions of its Israeli franchisee," CNBC reports.
Omri Padan held the McDonald's Israel franchise for 30 years and built a chain of 225 outlets with 5,000 employees.
Published by Globes, Israel business news - en.globes.co.il - on April 7, 2024.
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