McDonald's Blames Weak Sales On Middle East Conflict

(RTTNews) - McDonald's Co. (MCD) recently released its financial results for the quarter, and they were mixed. The fast-food giant faced a decline in sales in the Middle East following boycotts that were initiated by an announcement from McDonald's Israel, a local franchisee, about providing complimentary meals to Israeli soldiers. The boycotts, which led to customer protests, affected sales in nations with sizable Muslim communities like France, Indonesia, and Malaysia. Some franchisees, like McDonald's Oman, pledged donations to Gaza relief efforts in response to the boycotts.

To ensure employee safety, McDonald's had to adjust store hours or close certain outlets temporarily due to protests. The impact of the boycotts on the company's finances in the quarter was not clarified by McDonald's, but CEO Chris Kempczinski highlighted their significant impact in the Middle East and Muslim-majority countries.

During the earnings call, McDonald's CFO Ian Borden stated, "We do not expect to see meaningful improvement until there is a resolution in the Middle East."

McDonald's disclosed providing minimal financial aid to franchisees affected by the Middle East conflict. However, sales in its licensed markets business, which predominantly includes Middle Eastern entities, grew only by 0.7% in the previous quarter due to the tensions - far below the over 4% growth in the United States and other global markets. The company's stance against violence and hate speech, emphasizing inclusivity, was also expressed by Kempczinski in a LinkedIn post.

It's worth noting that McDonald's was not the only U.S. company to face repercussions from the Middle East conflict. Starbucks revealed last week that it also faced boycotts in the region and other areas due to perceived support for Israel.