Sharp Dip in Starbucks and McDonald’s
Introduction: Starbucks and McDonald’s reported significant drops in global sales. The CEOs of both companies acknowledged the impact of boycott calls related to Israel’s war on Gaza.
McDonald’s Faces Boycott: McDonald’s faced boycott calls after its franchises provided free meals to Israeli soldiers. This support was during Israel’s war on Gaza. The fast-food giant’s global sales dipped for the first time since late 2020.
Sales Decline: In a report released on July 29, McDonald’s announced a 12 percent decrease in net income. Their net income fell to just over $2 billion in the second quarter. Falling guest counts and strategic menu price increases were partly blamed.
CEO’s Statement: McDonald’s CEO Chris Kempczinski noted the negative impact of the Middle East war. He confirmed that external pressures affected their quarterly performance.
Regional Impact: Kempczinski highlighted that markets with higher Muslim populations, like France, saw more impact. He acknowledged that the war’s influence was stronger in these regions.
Boycott Movement: The Boycott, Divestment, Sanctions (BDS) movement called for McDonald’s boycott in January. This was after McDonald’s Israeli franchises supported Israeli soldiers. The BDS movement advocates for economic and political pressure on Israel.
Starbucks Faces ‘Headwinds’: Starbucks also reported a decline in sales due to boycott calls. The Seattle-based coffee giant’s sales fell by 2 percent in North America. International profits declined by 23 percent.
CEO’s Acknowledgment: Starbucks CEO Laxman Narasimhan mentioned “headwinds” in the Middle East and other regions. He noted these challenges in a quarterly call on July 30.
Impact of Boycott: Starbucks faced criticism and protests in various regions. The company’s legal battle with its union intensified negative perceptions. Former CEO Howard Schultz, a significant investor in Israel, added to the controversy.
Historical Context: The BDS movement, founded in 2005, pressures Israel to comply with human rights standards. The movement has successfully influenced global brands and governments.
Conclusion: The impact of the anti-Israel boycott on Starbucks and McDonald’s sales highlights the power of collective action. Both companies must navigate these challenges to restore their global market positions.