Fast-food outlets face existential threat from BDS movement
6 Min Read
Global brands are feeling the impact of the expanding Boycott, Divestment, and Sanctions (BDS) movement, driven by pro-Palestinian activists seeking to end international support for "Israel's" genocide in Gaza.
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A file photo shows a Starbucks logo sign in the windows of one of the chain’s cafes in the US. (AP)
Global brands have experienced the repercussions of the expanding Boycott, Divestment, and Sanctions (BDS) movement, driven by pro-Palestinian activists aiming to pressure and penalize companies perceived to back the ongoing Israeli genocide against Palestinians in Gaza, as per a new report released by TIME.
However, the most significant effects have been observed in Muslim-majority nations in the West East and Southeast Asia. In these regions, boycotts targeting various fast-food chains have started to imperil franchisees, despite local operators refuting claims linking their businesses to "Israel".
According to local media reports, QSR Brands, the franchise holder for KFC in Malaysia and other Southeast Asian regions, stated on Monday its decision to temporarily close more than 100 KFC outlets nationwide. This move aims to address rising business expenses and concentrate on high-traffic areas.
The decision coincides with a widespread boycott of the fried chicken chain across Malaysia, with activists condemning its American parent company, Yum! Brands, for its investment in an Israeli startup.
“BDS is the most effective way for people of conscience to put their solidarity with Palestinian human rights into action,” Luqa AbuFarah, the North American coordinator of the BDS National Committee, said as quoted by TIME in February.
"I don't think that me boycotting these brands would affect them."
— Al Mayadeen English (@MayadeenEnglish) October 30, 2023
Think again.#PalestineGenocide #GazaUnderAttack pic.twitter.com/rGkj8vVwKt
Local franchise operators of affected fast-food brands contend that boycotts will negatively impact local communities and workers.
In a statement, QSR emphasized its commitment to positively contributing to the Malaysian community, maintaining brand loyalty for KFC, and safeguarding the brand's employees. The company highlighted that approximately 85% of its 18,000 employees in Malaysia are Muslim. QSR expressed confidence that Malaysians will recognize its Malaysian heritage, sincerity, and efforts to support the Malaysian ecosystem.
The storm of Pro-Palestinian boycotts and revenue slumps
KFC isn't the sole brand facing challenges. Other fast-food chains are also encountering difficulties amid the ongoing Israeli aggression on Gaza.
KFC, apart from the issues in Malaysia, has encountered significant obstacles in the Middle East and North Africa, regions with strong pro-Palestinian sentiments.
Recently, Algeria's inaugural KFC outlet temporarily closed shortly after its grand opening due to demonstrations by pro-Palestinian protesters outside the establishment. Additionally, Americana Restaurants International, a major F&B conglomerate operating nearly 2,500 outlets in the Middle East and North Africa—including KFC, Pizza Hut, and Krispy Kreme—trimmed almost 100 positions earlier this year and reported a 15% decline in revenue in the last quarter of 2023.
McDonald's
McDonald's CEO, Chris Kempczinski, highlighted the significant impact of boycotts in the Middle East and Muslim-majority countries like Indonesia and Malaysia. The global fast-food giant has found itself at the forefront of worldwide boycotts since reports emerged of its Israeli restaurants offering free food to Israeli occupation forces amid the ongoing Israeli aggression on Gaza.
Despite McDonald's over 40,000 locally owned and operated stores worldwide, its international sales only increased by 0.7% in the last quarter of 2023, a stark contrast to the 16.5% growth in the same period the previous year.
McDonald's Corporation said, as quoted by TIME in a February statement, that the company "is not funding or supporting any governments involved in this conflict" and that "any actions from our local Developmental Licensee business partners were made independently without McDonald's consent or approval."
However, AbuFarah said, as quoted by TIME, “The actions of a McDonald’s franchisee cannot be isolated from the company’s worldwide operations,” adding that the company “is responsible for ensuring that its franchisee is not involved in conduct that damages McDonald’s reputation, including any association of the brand with grave human rights violations.”
Earlier this month, McDonald's Corporation made a controversial move seemingly aimed at addressing criticism by reclaiming ownership of its 225 restaurants in "Israel". The corporation repurchased the franchise from Alonyal Limited, which had operated McDonald's establishments in the country for over three decades and was responsible for supplying free meals to the Israeli army.
McDonald's franchises in several Muslim-majority nations, including Saudi Arabia, the United Arab Emirates, Pakistan, and Malaysia, have been eager to distance themselves from accusations of supporting "Israel".
They have issued statements disavowing any connections with their Israeli counterpart.
Last year, McDonald's Malaysia, identified as a "100% Muslim-owned entity," initiated a $1.3 million lawsuit against the local chapter of the BDS movement, alleging "false and defamatory statements" that linked the fast-food chain to Israeli aggression on Gaza, resulting in detrimental effects on its business.
Despite sparking public backlash, McDonald's Malaysia withdrew the lawsuit in March following mediation with the pro-Palestinian group. The company declared its ongoing support for Palestinians through humanitarian aid efforts and employee fundraising initiatives.
Starbucks
Starbucks faced backlash from activists last October when it filed a lawsuit against its US workers' union over a pro-Palestinian social media post made on a union account. This action prompted a retaliatory lawsuit from the workers' union. Subsequently, the coffee chain became another target of the global boycott movement.
In October, members of Turkey's ruling Justice and Development Party staged sit-in protests outside Starbucks stores nationwide.
Meanwhile, Malaysia's Starbucks franchisee Berjaya Food attributed a 38.2% decline in revenue in the last quarter of 2023 to boycotts.
Alshaya Group, operating approximately 2,000 Starbucks shops and other brands in the Middle East and North Africa, announced in January the closure of dozens of its shops in Egypt, including Starbucks, and the layoff of nearly 400 employees due to "difficulties faced by overseas businesses." In March, it further cut 2,000 jobs, primarily in its Starbucks operations, as the company struggled amid the boycotts.
Domino's
Domino's, the pizza chain, has also been targeted by BDS activists for remaining silent when its branches/franchisees in "Israel" supported what activists describe as genocide, including reports of providing free food to Israeli troops.
Domino's Pizza Enterprises, the Australia-based operator serving the Asia-Pacific and Europe, experienced a 30% drop in shares in January. CEO Don Meij attributed the pizza chain's poor sales in Asia to anti-American sentiment, particularly in Malaysia, stemming from ongoing events in the Middle East.
However, Domino's performance has varied across markets, with the pizza chain reporting strong sales in the US in the first quarter of this year, driven by changes to its loyalty programs and delivery system.
