The world is turning on American fast food, from McDonald's to Starbucks, amid Middle East unrest
- Boycotts stemming from Israel's invasion of Gaza hit McDonald's fourth-quarter sales, it said.
- International markets from Indonesia to France suffered, CEO Chris Kempczinski said.
McDonald's is the latest big American brand to report that boycotts related to Israel's invasion of Gaza are taking a toll on sales.
Sales from McDonald's International Developmental Licensed Markets segment, which includes restaurants in several dozen markets licensed to franchisees, rose 0.7% in the company's fourth quarter — much slower than the expected 5.5% growth rate, Reuters reported.
"The most pronounced impact that we're seeing is in the Middle East and in Muslim countries like Indonesia and Malaysia," CEO Chris Kempczinski said on McDonald's earnings call on Monday.
Sales in countries with significant Muslim minority populations, such as France, were also affected by the boycotts, Kempczinski said. McDonald's didn't clarify exactly how much the boycotts cost the company during the quarter.
Multiple major US-based brands have reported a hit to their businesses since Hamas's attacks in Israel — and Israel's subsequent invasion of Gaza — in October. One international franchisee for pizza chain Domino's said last month that customers in Malaysia were turning away from the brand as they associated its American origins with support for Israel.
Some brands have blamed the sales losses on "misinformation," as Starbucks did in a December statement on the conflict.
McDonald's CEO Kempczinski took a similar approach in a LinkedIn post last month. "Several markets in the Middle East and some outside the region are experiencing a meaningful business impact due to the war and associated misinformation that is affecting brands like McDonald's," he wrote at the time.
McDonald's said it gave the Israel Defense Forces "tens of thousands" of free meals in the days after the conflict began.
"We do not expect to see meaningful improvement until there is a resolution in the Middle East," McDonald's CFO Ian Borden said during the call.