McDonald’s CEO said it’s experiencing ‘meaningful business impact’ across the Middle East
By Jordan Valinsky, CNN
New York (CNN) — McDonald’s said that it’s experiencing “meaningful business impact” in the Middle East because of the war between Israel and Hamas, joining Starbucks in issuing public statements trying to squash misconceptions and boycotts affecting the brands.
In a letter posted on LinkedIn, McDonald’s CEO Chris Kempczinski said that “several markets” across the Middle East are “experiencing a meaningful business impact due to the war and associated misinformation” affecting the American fast food chain. “This is disheartening and ill-founded,” he said.
Kempczinski didn’t provide specifics, including how much sales are being negatively affected. However, he stated, “In every country where we operate, including in Muslim countries, McDonald’s is proudly represented by local owner operators who work tirelessly to serve and support their communities while employing thousands of their fellow citizens.”
His comments come a few months after a McDonald’s operator in Israel had been offering discounts to soldiers, security forces and others since the October 7 assault by Hamas militants in Israel.
Many McDonald’s operators in the region quickly distanced themselves from the Israeli operator’s actions. Franchise groups in Kuwait, Pakistan and other countries issued statements saying they did not share ownership with the Israeli franchise, and some of those franchises noted they have made financial donations to aid those in Gaza.
At issue is McDonald’s franchise model, in which independently owned and operated restaurants make decisions separately from the company. Customers might be unaware of the distinction and believe an action one location takes is always officially sanctioned by the McDonald’s corporation or reflective of the positions of other locations.
The vast majority of McDonald’s locations are run by local franchise operators. These operators act in many ways as independent businesses: They set wages and prices and, when they feel it appropriate, make statements or donations at their discretion. That approach has helped make McDonald’s a global phenomenon, with over 40,000 locations globally, including nearly 27,000 outside of the United States, as of 2022. But it means the company can’t dictate how each operator responds in a crisis, for better or worse.
McDonald’s is expected to report earnings later this month, when it could reveal more about the issues mentioned by Kempczinski.
In December 2023, Starbucks made comments about people protesting the company and disrupting its stores over the Israel-Hamas war.
“We see protestors influenced by misrepresentation on social media of what we stand for,” said Starbucks CEO Laxman Narasimhan in a letter to employees and customers.
“Cities around the world – including here in North America – have seen escalating protests. Many of our stores have experienced incidents of vandalism,” he said. “We have worked with local authorities to ensure our partners and customers are safe.”
CNN’s Danielle Wiener-Bronner contributed to this report.
The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
