Starbucks Middle East franchisee to slash over 2,000 jobs as boycotts linked to the Israel-Gaza conflict hit Western brands, says report

• A Starbucks franchisee in the Middle East is set to lay off over 2,000 employees, Reuters reported.
• AlShaya Group has been hit by boycotts of its Western brands amid the Israel-Gaza war.

A Starbucks franchisee is set to lay off over 2,000 employees across the Middle East and North Africa (MENA) in the wake of consumer boycotts linked to the Gaza conflict, Reuters reported, citing people familiar with the matter.

Starbucks has faced protests from both pro-Palestine and pro-Israel camps, but it has released statements saying it has "no political agenda" and that it condemns "violence, the loss of innocent life and all hate and weaponized speech."

In a statement in December, Starbucks CEO Laxman Narasimhan said protesters had been "influenced by misrepresentation on social media" of what the company stands for.

The company has also become embroiled in a dispute in the US, where its management and a union organizing its workers sued each other over using the company's name and logo following a social media post by the union declaring "solidarity" with Palestine.

In a statement to Business Insider, the franchisee, AlShaya Group, which operates Starbucks in the Middle East, confirmed that it had "taken the sad and very difficult decision" to reduce the number of personnel in its Starbucks MENA stores.

The company pointed to "challenging trading conditions over the last six months" as the reason for the cuts, which will affect around 4% of its total workforce, the Reuters report said.

AlShaya told BI it was still "committed to the region" and would support those affected by the layoffs.

AlShaya, established in Kuwait in 1890, also owns the rights to operate brands including Chipotle, The Cheesecake Factory, and Victoria's Secret, according to its website.

A Starbucks spokesperson told Business Insider: "As Alshaya reviews its business portfolio they have made the difficult decision to eliminate some roles in their Starbucks store portfolio."

"Our thoughts are with the green apron partners who will be leaving, and we want to thank them for their contributions," they added.

Starbucks CEO Narasimhan said in a Q1 earnings call that the company had seen "a significant impact on traffic and sales" in the Middle East but believed it would be a "transitory" issue.

The layoffs came as Starbucks and other Western brands such as McDonald's and KFC have faced consumer boycotts over the Israel-Gaza war.

Fast good giant McDonald's missed its first-quarter sales target for the first time in almost four years after boycotts hit its operations in the Middle East, Indonesia, Malaysia, and France, per Reuters.

"So long as this war is going on ... we're not expecting to see any significant improvement (in these markets)," McDonald's CEO Chris Kempczinski said.

Israel's mass airstrikes and ground invasion of the Gaza Strip have killed more than 30,000 Palestinians in the conflict so far.

The strikes were launched in response to Hamas' October 7 attacks, which killed around 1,200 people in Israel and saw about 240 others taken hostage in Gaza.