McDonald's faces slowest growth since 2020 amid Middle East boycotts in response to Gaza crisis
5:48 PM EST, February 5, 2024, updated: 4:13 AM EST, March 7, 2024
McDonald's global sales expanded by 3.4% from October to December 2023, significantly less than the expected growth of 4.7%. As the Reuters agency highlights, such sluggish performance from the burger giant hasn't been seen since October 2020, around the time of the COVID-19 pandemic and related lockdowns.
The company's CEO, Chris Kempczinski, acknowledges that the slump is influenced by boycotts not only in the Middle East but also in countries like Malaysia, Indonesia, and France. These are countries where, as stated by the Egyptian newspaper "Ahram", Muslims make up the majority or a considerable minority.
The boycott originated from accusations towards McDonald's for supporting pro-Israeli activities in these regions. This began when an Israeli franchisee offered free meals to soldiers. In rebuttal, restaurant administrators in Arab nations increased their charitable contributions to Palestinians living in the Gaza Strip, where Tel Aviv is carrying out a war against Hamas. Already, over 25,000 civilians have lost their lives in the conflict.
McDonald's does not expect improvement as the Gaza war persists
In a conversation with Reuters, Kempczinski shared his anticipation—that as long as the Gaza war continues—the restaurant chain does not foresee "any significant improvement" in markets where boycotts are stern. Shareholders expressed their main concern to the agency about the continual decline in profits due to this dispute.
Despite this, it's important to note that McDonald's had a better performance in 2023 than in the previous year. "The company's revenue increased by 8% annually, resulting in a total of $6.41 billion. The projected revenue had been $6.45 billion, as surveyed by the London Stock Exchange Group," according to a report from "Puls Biznesu".
McDonald's isn't the only Western chain that's facing challenges. Starbucks, another big name, has cut its sales forecasts for 2024 by the end of January. Protests taking place outside US coffee shops have also been a major factor limiting their sales.
