U.S.-based fast-food giants McDonald’s Corp MCD and Yum! Brands, Inc‘s YUM subsidiary KFC are grappling with a challenging business environment in Asia, the Middle East, and parts of Europe due to boycotts linked to the Israel-Gaza conflict.
What Happened: The boycotts, fueled by the perceived association of these brands with Israel, have led to a significant drop in sales for McDonald’s and KFC in Muslim-majority countries, reported Bloomberg on Wednesday.
McDonald’s, in particular, has been targeted after its Israeli franchisees provided meals to the country’s soldiers following an attack on Oct. 7. This led to a widespread boycott, with franchisees in other Muslim-majority countries expressing solidarity with Palestinians.
"Everybody got impacted, this is something not many people realized, not just western brands, everybody got impacted by the conflict post Oct. 7," Brandon Guthrie, co-founder and general partner at Shatranj Capital Partners, said in a podcast with Bloomberg Intelligence.
The impact of these boycotts was most pronounced in Egypt, Jordan, and Morocco, according to Guthrie.
McDonald’s CEO Chris Kempczinski acknowledged the significant impact of the boycotts in the Middle East, as well as in Muslim countries like Indonesia and Malaysia.
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Why It Matters: The impact of the Israel-Gaza conflict on international businesses has been a recurring theme. In February, McDonald’s reported a sales miss due to the ongoing conflict.
The company’s decision to buy back all its Israeli restaurants in April was seen as an attempt to mitigate the impact of the conflict on its international operations. However, the latest report suggests that the boycotts continue to have a significant impact on the company’s operations in the region.
Even KFC outlets in Southeast Asia have not been spared, with over 100 outlets in Malaysia temporarily closing due to the boycotts.
In Pakistan, local water and soft drink brands are being given preference over Coca-Cola and Pepsi, leading to an 11% drop in sales for the can maker of these beverage giants, according to the report.
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Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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