Impact on International Development Licensed Markets
McDonald’s, the global fast-food giant, has reported a decline in sales in the latest quarter. The ongoing turmoil in the Middle East has primarily affected the company’s international development licensed markets and segment. Same store sales in this segment increased by a meager 0.7%. This slight uptick is attributed to “the impact of the war in the Middle East,” according to the company. McDonald’s is closely monitoring the evolving situation and expects a continued negative impact on systemwide sales and revenue as long as the war persists.
Global Same-Store Sales Growth
Overall, global same-store sales increased by 3.4% in the quarter. However, this represents the slowest sales growth in about three years, as reported by Reuters. The decline in sales in the Middle East due to the war between Israel and Hamas has significantly impacted McDonald’s business in the region and beyond.
CEO’s Warning and Impact on McDonald’s
McDonald’s CEO, Chris Kempczinski, had already warned last month about the negative effects of the war on the company’s operations in the Middle East. In a LinkedIn post, Kempczinski highlighted that “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.” This warning has now materialized with the reported decline in sales.
Shares and Industry Boycotts
Shares of McDonald’s fell in early trading Monday, contributing to a decline of over 3% this year. In contrast, the S&P 500 has risen nearly 4%. McDonald’s is not alone in facing challenges due to the Middle East conflict. Other top chains, such as Starbucks, have also become targets of boycotts over their perceived pro-Israel stance and alleged financial ties to Israel.
Starbucks CEO Experiences Vandalism
Starbucks CEO, Laxman Narasimhan, has revealed that many of the company’s stores have experienced incidents of vandalism as protests fueled by misrepresentation have escalated. The impact of the Middle East conflict on Starbucks, similar to McDonald’s, has resulted in negative consequences for the company’s operations.
Fox Business’ Michael Dorgan contributed to this report.