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McDonald's to buy back Israeli restaurants after boycotts

Update : 05 Apr 2024, 14:55

Fast food giant McDonald's is to buy back all its Israeli restaurants following a boycott of the brand in response to the Israel-Hamas war.

The company said it had reached an agreement with franchisee Alonyal for the return of 225 outlets across the country employing 5,000 people.

McDonald's was criticised after Alonyal started giving away thousands of free meals to Israeli soldiers.

It admitted in January the conflict had "meaningfully impacted" its business.

Alonyal, which is led and owned by chief executive Omri Padan, has operated McDonald's restaurants in Israel for more than 30 years.

McDonald's uses a franchise system which means that individual operators are licensed to run outlets and employ staff.

The boycott of McDonald's was sparked after Muslim-majority countries such as Kuwait, Malaysia and Pakistan issued statements distancing themselves from the firm for its perceived support of Israel. 

Vocal protests were staged world-wide as the grassroots boycott spread beyond the Middle East. As well as restaurants in the region, McDonald's businesses in France, Indonesia and Malaysia have also been affected.

On Thursday, the company said: "McDonald's remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward." It also thanked Alonyal for building the brand in Israel.

Mr Padan said: "We are encouraged by what the future holds."

The US company said the restaurants, operations and employees in Israel would be retained "on equivalent terms" though the terms of the sale were not revealed.

At the start of the year, McDonald's chief executive Chris Kempczinski blamed the backlash on "misinformation" but it hit the bottom line nonetheless and the company missed its first quarterly sales target in nearly four years. The boycott was described as "disheartening and ill-founded" by McDonald's. The company relies on thousands of independent businesses to own and operate most of its more than 40,000 stores around the world. About 5% are located in the Middle East. 

"In every country where we operate, including in Muslim countries, McDonald's is proudly represented by local owner operators," Mr Kempczinski said at the time.

"So long as this war is going on... we're not expecting to see any significant improvement [in these markets]," the McDonald's boss added.

The company will be hoping that by taking the Israeli business back "in house" it can restore its reputation in the Middle East and meet its key sales targets once more.

Much of the Gaza Strip has been devastated during the Israeli military operations that began after Hamas-led gunmen attacked southern Israel on 7 October, killing about 1,200 people and seizing 253 hostages. About 130 of the hostages remain in captivity, at least 34 of whom are presumed dead.

More than 33,000 people have been killed in Gaza since then, the territory's Hamas-run health ministry said. BBC 

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