Bloomberg revealed on Monday that McDonald's Corporation faced a setback in its fourth-quarter performance as sales failed to meet investor expectations, primarily due to the impact of boycotting on Israeli-linked businesses.

Comparable sales, a pivotal metric in the restaurant industry, grew by 3.4% during the period, marking the slowest pace since Q4 of 2020 and falling short of analysts' average estimates, as reported by the company on Monday. Revenue also missed expectations.

Expectations were lowered after Chief Executive Officer Chris Kempczinski's warning earlier this year of a "meaningful business impact" in the Middle East. The segment that includes the region, which accounts for about 10% of McDonald's revenue, fell well short of estimates.

After the war broke out, the chain became one of the most prominent targets for boycotts in Muslim nations over its stance on the war on Gaza.

The company has consistently said that its restaurants are operated independently by local franchisees. However, due to its neutrality being interpreted as complicity in the Gaza genocide, it has become the focal point of numerous boycott campaigns globally.

Related News

Croatian president refuses to meet Israeli FM over Gaza genocide

Gaza, the gateway to Al-Quds, calls for support: Al Mayadeen expert

Read more: Boycotting works: McDonald’s acknowledges financial setback

Growth in other regions weakened as well. In the US, higher prices helped drive comparable-sales growth of 4.3%, which is slightly below the average market estimate and about half of the previous quarter’s rate. Similar scenarios took place in international markets where McDonald's operates and franchises restaurants. Results were strong in the UK, Germany and Canada, but that was partly offset by a decline in same-store sales in France.

In the statement, Kempczinski said the company is "confident in the resilience of our business amid macro challenges that will persist in 2024." Executives have previously said higher interest rates and inflation are putting pressure on consumers, while also flagging China’s slowing economy.

The fourth-quarter results included pretax charges of $138 million, which McDonald's attributed to the write-off of software no longer in use and restructuring costs. Excluding those items, earnings per share of $2.95 were above analysts' expectations.

McDonald's expects to add 1,600 net stores around the world this year, it said in a filing accompanying the results, as part of what it says is the biggest growth push in its history. The chain reiterated guidance that net openings will boost sales generated by franchised and company-operated stores by about 2% this year, and that operating margin would rise by a percentage in the mid-to-high 40s.

Shares rose 0.2% in Monday premarket trading in New York.

Read more: BDS Malaysia denies 'defaming' McDonald's following lawsuit