McDonald's CEO Chris Kempczinski stated that the ongoing "war and associated misinformation" in the Middle East is hurting the company's performance, which has continued into its fourth month.
Israel-Hamas War
On October 7, militants from Hamas, a Palestinian Islamist organization controlling the Gaza Strip, initiated a significant attack on southern Israel that resulted in over 1,200 deaths and 240 people taken hostage. Israel declared war as a response, launching a counteroffensive against Hamas in Gaza. According to the Hamas Health Ministry, over 22,000 people in the territory have been killed, which has led to protests and boycotts of Israeli and American businesses in the Middle East.
McDonald's Facing Backlash
McDonald's depends on numerous independent businesses to own and operate most of its over 40,000 stores globally. Approximately 5% of these stores are situated in the Middle East.
Primarily consisting of locally owned franchises, McDonald's received early criticism when reports suggested that some locations in Israel provided free meals to Israeli soldiers after the war began. This action faced an immediate backlash that prompted owners in Muslim-majority countries to release statements distancing themselves from the controversy.
In a LinkedIn post, Kempczinski highlighted that McDonald's franchises in Muslim countries, facing boycott calls over alleged support for Israeli soldiers, are owned by local operators dedicated to serving their communities and employing thousands of fellow citizens. Kempczinski condemned "violence" and "hate speech." McDonald's hasn't expressed support for Israel or the Gaza war, calling the backlash disheartening and ill-founded. Despite calls for boycotts in the Middle East, the global sales of the American burger chain still increased by 10.9% in Q4 2023.
Kempczinski's post comes amid escalating tensions over the recent boycotts. The pro-Palestinian Boycott, Divestment and Sanctions (BDS), which had not previously officially targeted McDonald's, has now called for a boycott of the brand.
McDonald's Malaysia, supported by a Saudi firm, filed a $1.3 million lawsuit against the Malaysia BDS group, alleging "false and defamatory statements" that harmed its business. BDS urged McDonald's to sever ties with its franchisee in Israel and Malaysia unless it withdrew the lawsuit. The group expressed that McDonald's Malaysia and its Saudi owner are attempting to silence voices supporting the Palestinian liberation struggle in Malaysia rather than pressuring the parent company to end its franchise agreement in Israel. They called for action, stating, "We cannot let this pass. Let's show McDonald's what grassroots boycotts can do."
McDonald's, facing boycotts over its franchise in Israel, did not comment on a lawsuit filed by McDonald's Malaysia against the Malaysia BDS group. Instead, they referred to a previous statement where CEO Mr. Kempczinski expressed the company's condemnation of all violence and opposition to hate speech, reaffirming their commitment to welcoming everyone.
Companies Beyond the Food Industry Also Face Criticism
Companies beyond the food industry have encountered criticism for marketing choices, like the fast-fashion retailer Zara, which faced boycott calls following advertisements that depicted models in a rubble-filled environment with mannequins missing limbs in December. The ads sparked outrage on social media, with many condemning them for trivializing the ongoing conflict. Zara deleted the ads and apologized, attributing the situation to a "misunderstanding" and stating that the photos were taken in September before the war in Gaza started.
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