McDonald’s buys all Israeli franchise restaurants amid boycotts

McDonald’s announced that it will buy its 30-year-old Israel franchise from Alonyal Ltd, reclaiming ownership of 225 outlets employing over 5,000 individuals, Aljazeera reported.
Following Alonyal’s declaration of providing free meals to the Israeli military after the October 7 attack by Palestinian group Hamas, the US fast-food chain faced boycotts and protests.
While McDonald’s is a global corporation, its franchises are typically locally owned and operate independently. Its CEO, Chris Kempczinski, said previously that the company had seen “meaningful business impact” in several markets in the Middle East and some outside the region due to the Israel-Hamas conflict, as per Aljazeera.
“For more than 30 years, Alonyal Limited has been proud to bring the Golden Arches to Israel and serve our communities,” Omri Padan, CEO and owner of Alonyal, said in a statement on Thursday.
According to Aljazeera, McDonald’s added that it “remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward.”
Following the transaction’s completion in the coming months, McDonald’s will assume ownership of Alonyal’s outlets and operations, maintaining its current workforce.
However, the terms of the transaction were not disclosed by the companies involved.
In February, Kempczinski said that the war had had a “disheartening” effect on sales in Middle Eastern countries and other Muslim-majority nations such as Malaysia and Indonesia.
“So long as this conflict, this war, is going on … we’re not expecting to see any significant improvement in this,” Kempczinski said in a conference call.
“It’s a human tragedy, what’s going on, and I think that does weigh on brands like ours.”
During October-December, sales growth for the fast-food chain’s Middle East, China, and India division was only 0.7 per cent, significantly lower than market projections of 5.5 per cent.
This decline follows calls for a McDonald’s boycott by customers in Muslim countries, prompted by Alonyal’s announcement. Consequently, franchisees in nations like Egypt, Jordan, and Saudi Arabia distanced themselves from the donations, collectively pledging millions of dollars in aid to Palestinians in Gaza.
While Chicago-based McDonald’s is known as one of the United States’ most iconic brands, most of its restaurants worldwide are locally owned and operated.
Another prominent Western fast-food chain, Starbucks, has also faced boycott campaigns due to its perceived pro-Israeli stance and alleged financial ties to Israel.
CEO Laxman Narasimhan told journalists in February that Starbucks saw a “significant impact on traffic and sales” in the Middle East but also in the US, where protesters campaigned against the Seattle-based company, calling for it to take a stand against Israel.
Domino’s, a US-based pizza maker with franchises around the world, also faced blowback after posts on social media claimed without evidence that it had also given free food to Israeli soldiers.
The brand’s same-store sales dipped by 8.9 per cent in Asia in the second half of 2023, mainly because consumers in Malaysia associated it with the US, an Israeli ally, a company official said.