McDonald’s has faced criticism in the Middle East due to its support for the Israeli military, while those in neighboring countries donate to the Palestinians. This has caused a divide within the fast-food chain and has significantly impacted its sales.
When McDonald’s first opened in Israel in 1993, they wanted to import frozen French fries but were denied by local authorities due to concerns from potato farmers. This led to McDonald’s producing their fries locally, sparking a “French fry war” between Israel and McDonald’s.
Despite being active in the Israeli market for over thirty years and being successful by their own account, McDonald’s has faced increasing criticism due to the ongoing conflict. As a result, they have decided to buy back all branches in Israel from its local franchisee, Alonyal Limited.
The franchise system that McDonald’s operates under has complicated their positioning during the Gaza war. Each country’s branches operate independently, leading to protests and calls for boycotts from supporters of the Palestinian population worldwide. This has led to franchisees in neighboring countries distancing themselves from the actions of the Israeli licensee by donating to the Palestinian people.
McDonald’s CEO Chris Kempczinski expressed disappointment over the situation and its impact on business. The company reported its first sales decline in four years, particularly in the Middle East region, as a result of the Gaza War. This decline prompted Alonyal Limited to sell all 225 branches back to McDonald’s.
In an effort to restore their reputation in the Middle East, McDonald’s has announced its commitment to buying back these branches subject to certain conditions. The deal is expected to be completed in the coming months with all 5,000 employees retaining their jobs.
