War on Gaza: McDonald's and Starbucks sales hurt by Israel-Palestine boycotts

McDonald's and Starbucks have seen their profits take a hit as a result of the conflict in Gaza, with the companies pointing to boycotts over their perceived pro-Israel stances.

According to CNBC, McDonald's shares fell nearly 4 percent on Monday following reports that a sales slowdown in the Middle East had contributed to its fourth-quarter revenue miss.

For its part, Starbucks’ shares fell around two percent over the past week, saying its US sales were also harmed in the final three months of 2023.

McDonald’s CEO Chris Kempczinski said sales had been weaker in Muslim-majority countries - such as Malaysia and Indonesia - as well as across the Middle East.

“The ongoing impact of the war on these franchisees’ local business is disheartening and ill-founded,” Kempczinski said on Monday, speaking to analysts on the company’s conference call.

He added that he did not expect sales to recover before the end of the year.

Both companies have been perceived as supporting Israel in the current conflict in Gaza, although Starbucks has disputed this.

Free meals

McDonald's sparked outrage amongst pro-Palestinian activists last October when its Israel franchise announced it was giving free meals to Israeli soldiers in its branches in the country.

CNBC reported that the company saw fourth-quarter sales slip in the Middle East in the wake of the offer. The region accounts for two percent of McDonald’s global sales and one percent of its global earnings before interest and taxes.

Starbucks faced a backlash after it sued Starbucks Workers United in a federal court in Iowa over a pro-Palestinian social media post from the union.

On 9 October, two days after the Hamas-led attack on Israel - which saw around 1,140 people killed - Starbucks Workers United posted “Solidarity with Palestine!” on X, formerly known as Twitter.

The company threatened legal action over the tweet - which was deleted soon after being posted - and implied in a statement that the union supported Hamas' attacks in Israel.

Although Starbucks has said it supports no side in the conflict, the backlash over the incident has led many customers to perceive it as having a pro-Israel stance.

Starbucks CEO Laxman Narasimhan said on Tuesday that the company’s sales in both the US and the Middle East had been hit by boycotts.

McDonald's, however, said their US sales had been largely unaffected.

This article is available in French on Middle East Eye French edition.