McDonald's CEO Admits Boycotts Are Hurting Business
McDonald's is losing money because of what it claims is "misinformation" about its position in the Israel-Hamas war.
The burger chain is one of several multinational corporations to be feeling the effects of international boycotts following Hamas's surprise attack in Israel on October 7.
Around 1,200 people were killed and more than 200 kidnapped by the military arm of the Palestinian group. Israel then launched a campaign of air strikes and ground operations in Gaza which has killed more than 22,400 people, according to the Associated Press.
McDonald's along with coffee chain Starbucks were two of the hardest hit by boycotts. In the fast food giant's case, the boycott campaign began after Israeli franchises started offering free meals to Israeli Defense Force soldiers, promoted in a social media blitz in October.
Now, its CEO Chris Kempczinski has admitted McDonald's took a financial hit, especially in its Middle Eastern markets.
"Several markets in the Middle East and outside the region are experiencing a meaningful business impact due to the war and associated misinformation that is affecting brands like McDonald's," he wrote in a post on LinkedIn.
"This is disheartening and ill-founded. In every country where we operate, including in Muslim countries, McDonald's is proudly represented by local owner operators who work tirelessly to serve and support their communities while employing thousands of their fellow citizens. That local community connection is the genius of the McDonald's System."
Most McDonald's restaurants are run by franchisees globally. But Middle East locations are "part of the company's international developmental licensed markets division, which generates about 10 percent of the company's revenue," per Bloomberg.
Kempczinski previously spoke about the Israel-Hamas war in October when he said he was "deeply disturbed by the acts of antisemitism and Islamophobia" in a message and reported in media.
Boycotts against McDonald's were not only seen on social media, but also in stores where franchisees recorded a drop in foot traffic.
One franchisee even sued the pro-Palestinian Boycott, Divestment, Sanctions (BDS) group, claiming its anti-Israel protests cost it more than $1 million.
Gerbang Alaf Restaurants Sdn Bhd, the franchise owner of McDonald's locations in Malaysia, sued BDS for $1.31 million in damages, claiming that the boycotts resulted in a loss of profits and job cuts.
The lawsuit alleges that BDS made "false and defamatory statements" about McDonald's locations in the country relating to the ongoing war between Israel and Hamas militants.
BDS Malaysia said in a statement it "categorically deny this" and has enlisted the help of lawyers to fight the suit.
In October, McDonald's Malaysia announced it was donating 1 million Malaysian ringgits ($216,000) to a Palestinian humanitarian fund created through the country's government.
"Our contribution to the Palestine Humanitarian Fund will directly support relief efforts in Gaza, addressing the critical needs of those affected by this conflict. This includes medical aid, food, and shelter, as well as evacuation assistance if deemed necessary by the relief organizations," the statement read.
"Our unwavering commitment is focused on supporting the provision of essential aid to those in dire circumstances."
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