McDonald’s is to buy back 225 of its restaurants in Israel after the fast food chain blamed a boycott in the wake of the Israel-Hamas war for a slump in sales.
The US company said it had struck a deal to buy the restaurants from Israeli franchise Alonyal, which has owned and operated the chain’s outlets in the country for more than 30 years.
The deal will return 225 restaurants with more than 5,000 employees back to McDonald’s ownership. Terms were not disclosed.
McDonald’s has found itself embroiled in controversy since the early days of the Gaza conflict after the Israeli franchise said it had given away thousands of free meals to Israeli soldiers.
The Boycott, Divestment, Sanctions (BDS) movement, a pro-Palestinan organisation, urged consumers to shun the fast food chain as franchisees “openly supported” the Israeli military, while franchise groups in countries such as Kuwait and Pakistan distanced themselves from the Israeli firm.
In response, McDonald’s said it had no position on the war and that its franchisees around the world were free to act independently.
Chris Kempczinski, president and chief executive of McDonald’s, called the backlash “disheartening and ill-founded” and blamed it on “misinformation”.
He said the controversy was responsible for the chain’s first quarterly sales miss in nearly four years and warned that trading in the Middle East would not improve as long as the conflict continued.
In a statement on Thursday, McDonald’s said it “remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward”.
Omri Padan, chief executive and owner of Alonyal Limited, said: “For more than 30 years, Alonyal Limited has been proud to bring the Golden Arches to Israel and serve our communities.
“We’ve grown the brand to be the leading and most successful restaurant chain in Israel and are grateful to our management, employees, suppliers, and customers who made this possible. We are encouraged by what the future holds.”
The majority of McDonald’s restaurants around the world are run by franchisees, which pay the US corporation a fee to license its brand and recipes.
The strategy has helped to cement the chain’s status as one of the largest global brands, but means it cannot dictate central company policy in the event of a crisis.
McDonald’s is one of a number of major corporations that have been targeted by activists during the Israel-Hamas conflict.
Starbucks last year sued a staff union in Iowa for expressing solidarity with Palestine in a social media post, sparking fury from both pro-Israel groups who condemned the post and pro-Palestine campaigners who called for a boycott in response to the lawsuit.
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