McDonald's Announces Acquisition of Israel Franchise Amid Boycott Calls

TEMPO.CO, Jakarta - McDonald’s Corporation said on Thursday that it will acquire Alonyal, the owner of 225 McDonald’s restaurants in Israel which have been hit by calls for a boycott over Israel's operation in Gaza.

Terms of the transaction were not disclosed. McDonald’s said in a statement the deal was subject to conditions that it did not identify. 

Alonyal has operated McDonald’s restaurants in Israel for more than 30 years, today owning 225 franchised properties with more than 5,000 employees, who will be retained after the sale.

In presenting its 2023 earnings report in February, McDonald’s said the war in Gaza that escalated in October with the Hamas attacks on Israel was weighing on its results.

McDonald’s was targeted with boycott calls after the franchised restaurants in Israel offered thousands of free meals to Israeli soldiers.

“We recognize that families in their communities in the region continue to be tragically impacted by the war and our thoughts are with them at this time,” Chief Executive Chris Kempczinski said in an analyst call, as quoted by AFP.

He said the impact of the boycott was “meaningful,” without elaborating.

McDonald’s fourth-quarter sales disappointed analysts. In franchised restaurants outside the United States, comparable sales fell 0.7 percent.

“Obviously the place that we’re seeing the most pronounced impact is in the Middle East. We are seeing some impact in other Muslim countries like Malaysia, and Indonesia,” said Kempczinski.

This also happened in countries with large Muslim populations such as France, especially for restaurants in heavily Muslim neighborhoods, he said.

At the beginning of January, Kempczinski announced that the company had experienced a “meaningful business impact” following calls for a boycott of the fast-food chain.

In a blog post on LinkedIn, Kempczinski wrote: “Several markets in the Middle East and some outside the region are experiencing a meaningful business impact due to the war and associated misinformation that is affecting brands like McDonald’s.”

“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.”

McDonald’s faced criticism from pro-Palestinian campaigners as images and videos on social media revealed franchised stores in Israel providing free meals to its soldiers fighting in the war against Gaza, which sparked the anger of the Arab public and fuelled calls for a boycott.

In response, the Boycott, Divestment, Sanctions (BDS) movement, a pro-Palestinian organization founded in 2005, urged people to boycott McDonald’s in November, noting that franchisees “openly supported” the Israeli military.

“Instead of pressuring its parent company, McDonald’s Corporation to terminate its shameful franchise agreement in Israel, McDonald’s Malaysia and its Saudi owner are desperately trying to silence voices of peaceful solidarity with the Palestinian liberation struggle in Malaysia,” the group said.

“We cannot let this pass. Let’s show McDonald’s what grassroots boycotts can do.”

AL ARABIYA | REUTERS | MIDDLE EAST MONITOR

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