McDonald's reports sales decline due to Gaza conflict boycotts

SHAH ALAM - McDonald's has reported its sales miss in its fourth quarter, partly due to the impact of boycotts related to the Israel-Gaza conflict.

News portal FinancialTimes reported that the company encountered a sales impact in the Middle East and various overseas markets, with only a 0.7 per cent increase in comparable sales in its Middle East market, significantly below the anticipated five per cent growth.

The report quoted McDonald’s Chief Executive Officer Chris Kempczinski as acknowledging the conflict's impact, attributing the sales dip to 'misinformation' and 'boycotts,' particularly in the Middle East and predominantly Muslim countries such as Indonesia and Malaysia.⁠

"In (international developed licensed markets), we do not expect to see meaningful improvement until there is a resolution in the Middle East,” he said.

Kempczinski also said that McDonald’s had also experienced challenges in France, one of its main markets, in some areas with large Muslim populations.

The company's stock also saw an 4.3 per cent decline, causing investors to express concerns about the continued influence of the conflict on its earnings.

However, its US business saw weaker sales growth than expected, partly due to customers on lower incomes ordering less food and opting for cheaper items on the menu.

The boycotts were linked to the perceived support of Israel by the company, resulting in a sales decline in the Middle East and other Muslim countries.

The lasting effect of the boycotts was expected in the affected markets if the conflict persists.

The report added similar repercussions have been observed in other Western brands like Starbucks, witnessing diminished sales and store traffic in the Middle East.

McDonald’s, along with other US-affiliated fast-food chains and brands, has faced substantial boycotts from locals over the past months since Israel initiated its attack on Gaza in October last year.