Starbucks, McDonald’s, Kentucky Fried Chicken – large American brands in particular are feeling the consequences of calls for boycotts in their balance sheets. Not only customers in the Middle East, but also in Southeast Asia are avoiding companies from Israel’s most important supporting country.
The calls to boycott certain companies because of their actual or perceived support for Israel are sometimes hitting large US companies hard. The number of customers who are missing in protest against the Gaza war is not large enough to cause the affected companies into deep difficulties. However, sales in Muslim-dominated markets are visibly suffering.
Starbucks’ global sales fell by 2 percent in the past quarter, net profit even fell by 15 percent, and the share price plummeted. The decline was the first of its kind in nearly three years. Demand weakened, particularly in the main markets of the USA and China, as a result of high inflation and growing competition. But boycott campaigns are also putting international pressure on the coffee giant. In predominantly Muslim Southeast Asian countries such as Indonesia and Malaysia, sales have therefore declined significantly in recent months “Handelsblatt” reported.
The local franchisee PT Sari Coffee Indonesia, with more than 300 branches, reported a 30 percent drop in sales in February. “People are under social pressure to distance themselves from Starbucks,” the boss is quoted as saying. In Malaysia, the local franchisee Berjaya Food with 400 branches even complained about a 38 percent decline in sales in the last quarter of last year, according to the report. The company cited an ongoing boycott as the reason. And the Starbucks franchise owner in the Middle East, the Alshaya Group in Kuwait, wants to lay off around four percent of its employees because of the boycott.
“Significant” impact on McDonald’s business
The calls for a boycott were triggered by a dispute between the company and the union Starbucks Workers United over their pro-Palestinian post on Platform X. The fact that Starbucks founder Howard Schultz is Jewish could also play a role. The company emphasizes that it does not pursue a political agenda.
At the beginning of January, McDonald’s boss Chris Kempczinski reported a “significant” impact of the Israel-Hamas conflict and associated “misinformation” on business in the Middle East and in certain other markets. In Israel, some McDonald’s branches had previously distributed free meals to soldiers, and a boycott campaign followed. The local franchisee therefore gave up the 225 branches in Israel, and McDonald’s announced in April that it would buy them back.
In view of the boycott calls in countries such as Egypt, Jordan and Malaysia, both Starbucks and McDonald’s emphasized that they do not support governments financially and that the branches are operated by local franchisees who largely employ local employees. However, this doesn’t just leave customers in predominantly Muslim countries cold.
Dozens of KFC branches currently closed
Various apps are designed to help customers around the world identify companies and products that claim to support Israel – so they can leave them on the shelf. In Germany, a presenter who advertised such an app on her private Instagram account was recently thrown out by SWR. Calls for boycotts are now spreading rapidly through social networks. According to media reports, customers were also insulted and harassed in front of a Berlin Starbucks branch during a pro-Palestinian demonstration.
The US fast food chain KFC recently temporarily closed numerous branches in Malaysia. According to local media reports, there are more than 100 branches, the reason being the boycott. And the British consumer goods giant Unilever, with brands such as Dove and Ben & Jerry’s, reported that sales growth in Southeast Asia was slowed in the fourth quarter by the boycott of customers in Indonesia.
However, the political impact of consumer boycotts is limited. Losses in sales by American fast food chains are unlikely to put pressure on either the Israeli or US governments. Such as the American think tank Stimson Center analyzedthings might look different if something else were missing: investments in key sectors or defense contracts.