McDonald’s hits the headlines as the news of its buying back its 225 outlets in Israel surfaces on the Internet.
The company has been facing a lot of criticism after its franchise in Israel owned by Alonyal announced a donation of free meals to the Israeli military shortly after the uprising on October 7 which resulted in 33,037 Palestinians being killed including more than 13,000 children as per the reports Palestinian Ministry of Health dated April 4, 2024.
Shortly after the announcement, Pro-Palestinians mainly Muslims called for a global boycott which terribly affected the food company as the sales of the firm plummeted to low numbers.
Alonyal Limited signs the agreement
On April 04, 2024, Alonyal Limited of Israel announced an agreement to sell McDonald’s Business in Israel to McDonald’s Corporation. This declaration is reflected on the official website of the latter.
Omri Padan, CEO and owner of Alonyal Limited, announced that an agreement to sell Alonyal to McDonald’s Corporation has been signed. Alonyal, who has owned and operated McDonald’s restaurants in Israel, started the brand journey in Israel more than 30 years ago and has grown the business to 225 restaurants and more than 5,000 employees. Now that the transaction has reached its completion, McDonald’s Corporation will now own Alonyal Limited’s restaurants and operations, and employees will be retained on equivalent terms.
Omri Padan, CEO and owner of Alonyal Limited in his statement reported, “For more than 30 years, Alonyal Limited has been proud to bring the Golden Arches to Israel and serve our communities. We’ve grown the brand to be the leading and most successful restaurant chain in Israel and are grateful to our management, employees, suppliers, and customers who made this possible. We are encouraged by what the future holds”.
While replying to the above statement, Jo Sempels, President of International Developmental Licensed Markets at McDonald’s Corporation said, “We thank Alonyal Limited for building the McDonald’s business and brand in Israel over the past 30 years. McDonald’s remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward”.
Ramifications of Boycott Faced by McDonald’s
After Muslim-majority countries called out for a massive boycott of the company, the fast-food chain saw its sales plunging to unprecedented numbers. In February this year the CEO of McDonald’s, Chris Kempczinski said that the war had caused a “disheartening” effect on sales in Middle Eastern countries and other Muslim-majority nations such as Malaysia and Indonesia. He also termed this as a ‘human tragedy’ as he quoted, “It’s a human tragedy, what’s going on, and I think that does weigh on brands like ours.” Shares of the firm also crashed down to about 4% after the announcement.
Kempczinski in a conference call commented on the future sales of the firm as he said, “So long as this conflict, this war, is going on … we’re not expecting to see any significant improvement in this”. Sales growth for the Chicago-based company division for the Middle East, China, and India during October-December was as low as 0.7 percent – far below market speculations of 5.5 percent.
Though the announcement by Alonyal Limited made the franchise owners in Muslim-majority countries such as Kuwait, Malaysia and Pakistan announce distancing themselves from the firm, the food chain profited from from price inflation, recording its strongest sales growth in the United States, UK, Germany and Canada.
The company’s global sales escalated by just under 4% in the fourth quarter, down from 8.8% in the previous quarter, and below its annual average. Kempczinski interposed that the war and “associated misinformation” had Ill effects on their business in the region.
