McDonald's buys all its restaurants in Israel after recognizing that the war affects its business

McDonald's announced this Thursday that it seeks to take the reins of its business in Israel by acquiring the 225 franchised restaurants that exist in the country. The takeover of the operations of its local franchisee, the Alonya firm, is a first attempt at a response by the American fast food giant after the war in Gaza turned the stores into a point of controversy

The hitherto McDonald's franchisee in Israel, who was in charge of bringing the Big Mac to the country, threw himself into the war efforts in the midst of a military conflict. In this way, Israeli soldiers and security agents could benefit from discounts of up to 50%, something that other large fast food chains have also imitated. In addition, the local operator was proud on Instagram to have donated up to 100,000 meals to the fighters.

This has generated calls for a boycott in other countries in the region as well as tensions with other firms that exploit the rights of the hamburger restaurant in countries such as Oman, Lebanon, Turkey, Saudi Arabia or Kuwait. This has caused, according to the news agency Bloomberg, that the company's CEO, Chris Kempczinski, has internally condemned “acts of anti-Semitism and Islamophobia.” The famous golden arches of McDonald's stores have also become targets of attacks, although isolated ones.

The real issue for the Chicago-based company is the impact on business. So far this year, McDonald's shares have lost more than 9%, motivated by the results for the fourth quarter of 2023, which disappointed analysts because it was the lowest growth since 2020. Kempczinski acknowledged that the conflict in the Middle East, region that represents approximately 10% of profits and 4% of its stores globally, would have a “significant impact.” In addition, the situation has forced some local operators to assist with reductions in the percentage of royalties they charge to franchisees.

It is not the only American giant affected by the operation. “Starbucks and McDonald's ran into trouble late last year over perceived support for Israel, which has led to calls for a boycott on social media and a decline in consumer interest,” says Bloomberg analyst Michael Halem. Intelligence. However, this expert maintains that the hamburger chain would not be the most affected firm in the sector.

Rethink the operation

“McDonald's remains committed to the Israeli market and seeks to ensure a positive experience for consumers and employees going forward,” said Jo Sempels, who heads the American firm's international operations. However, the company has avoided making direct reference to the reasons behind the decision. The Israeli press claims that McDonald's plan includes incorporating a new local partner in the coming months, once it finishes closing its agreement with Alonyal.

The decision of 'the big M' is far from what it has done in other markets also affected by the war. In May 2022, shortly after the military conflict with Ukraine began, the company decided transfer its Russian subsidiary to a Siberian partner, that renamed the brand and changed (half-way) its menu. The new firm, called Vkusno & tochka (which can be translated as “Tasty and that's it”) It no longer offers the iconic burgers, but maintains the same style and operating model. The former franchisee's expectation is that the purchase, which was for a “symbolic price” as they told the press, will be profitable in less than two years. For their part, restaurants in Ukraine began to reopen from August 2022 after interrupting its operations for six months after the start of the war.

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