McDonald’s to buy its Israel franchise amid Gaza war, global backlash

McDonald’s operator in Israel has agreed to sell its business to the parent corporation, the fast food giant said on Thursday, further demonstrating the effects of the Gaza war on its business.

The American company said it has reached an agreement with Alonyal Limited, the operator of McDonald’s in Israel, to buy its restaurants and operations. Alonyal has owned and operated McDonald’s in Israel for more than 30 years and currently has 225 restaurants and more than 5,000 employees, McDonald’s said in a statement.

McDonald’s added that the employees in Israel “will be retained on equivalent terms.” The transaction is subject to unspecified conditions and is expected to be closed in the coming months, according to the statement.

Why it matters: The decision follows controversy surrounding McDonald’s connection to Israel amid its war against Hamas in Gaza. From the early days of the conflict, there have been worldwide boycotts against the fast food giant.

In October, McDonald’s Israel posted on social media that it had provided free meals to Israel Defense Forces personnel. In response, McDonald’s franchises in the Gulf as well as in Jordan and Turkey issued statements distancing themselves from their Israeli counterpart and pledging aid to Gaza, Reuters reported.

McDonald’s has also sought to distance itself from the war elsewhere. After pro-Palestinian protesters released mice into some franchise locations in the British city of Birmingham in October, a McDonald’s spokesperson said the business is “dismayed by the disinformation and inaccurate reports regarding our position in response to the conflict in the Middle East.”

“McDonald's Corporation is not funding or supporting any governments involved in this conflict, and any actions from our local developmental licensee business partners were made independently without McDonald's consent or approval,” the BBC quoted the spokesperson as saying.

However, the controversies appear to be affecting McDonald’s business. The fast food giant reported its first quarterly sales miss in nearly four years during the fourth quarter of 2023.

The corporation is also grappling with disinformation campaigns. Earlier this week, images circulated on social media purportedly showing a notice from the company at some of its Scotland restaurants congratulating the Israeli military for killing people in Gaza. The notices were put up by activists and not the company, Reuters noted in a fact check on Wednesday.

Know more: Other companies such as Starbucks have also been affected by the Gaza war. In March, Kuwait’s AlShaya Group, which operates Starbucks in the Middle East, said it was laying off more than 2,000 people, citing the “continually challenging trading conditions over the last six months.”

Starbucks has likewise been accused of supporting Israel, though the American coffee giant closed its stores in the country in 2003.