McDonald’s to Repurchase Israeli Restaurants Following Boycott Backlash

Global fast food giant McDonald’s has announced a deal to buy back its franchised restaurants in Israel, after the brand experienced significant sales declines due to boycott calls last year.

The boycotts were spurred by comments made on social media by McDonald’s main Israeli franchisee, Alonyal, which said it had donated thousands of meals to Israeli military forces during their conflict with Hamas in Gaza.

Muslim-majority countries like Kuwait, Malaysia and Pakistan distanced themselves from McDonald’s in response. Protests also impacted sales at restaurants in the Middle East, Indonesia, France and other locations.

McDonald’s acknowledged in January that the Israel-Hamas war had “meaningfully impacted” its business performance. CEO Chris Kempczinski blamed “misinformation” for the financial hit.

Under the new agreement, McDonald’s will repurchase all 225 of its Israeli restaurants from Alonyal. The terms of the deal were not disclosed.

McDonald’s emphasized it remains committed to the Israeli market. Alonyal franchise owner Omri Padan said the companies are “encouraged by what the future holds.”

The buyback is aimed at restoring McDonald’s reputation in the Middle East and meeting sales targets by taking direct control of its Israeli operations. Some 5,000 employees will transfer over in the sale.

It remains to be seen if the move will succeed in ending calls to boycott McDonald’s or if the controversy will continue to dog the company abroad due to its ties to the Israeli market. McDonald’s relies heavily on international sales.