Gulf retail giant Alshaya Group, the entity holding the operational rights for Starbucks in the Middle East, is reportedly planning workforce reductions of over 2,000 staff due to the impact of consumer boycotts linked to the war on Gaza, Reuters reported citing sources familiar with the situation.

The layoffs, initiated on Sunday, constitute approximately 4% of Alshaya's overall workforce, which totals nearly 50,000 employees, the sources emphasized, noting that the majority of the job cuts are concentrated within its Starbucks franchise in the Middle East and North Africa.

According to the sources, the boycotts have created challenging trading conditions for the company.

Alshaya issued a statement announcing the layoffs, saying that "as a result of the continually challenging trading conditions over the last six months, we have taken the sad and very difficult decision to reduce the number of colleagues in our Starbucks MENA stores," but did not disclose the exact number.

Established in Kuwait in 1890, Alshaya stands as one of the largest retail franchise operators in the region, holding the rights to operate establishments for popular Western brands.

Since 1999, the group has owned the operational rights for Starbucks coffee shops in the Middle East, overseeing approximately 2,000 outlets across 13 countries in the Middle East, North Africa, and Central Asia.

Starbucks sales forecast reduced due to Gaza-linked boycott

Starbucks has lowered its annual sales forecasts and failed to meet market expectations due to boycotts in both the US and the Middle East. The company reported a "significant impact on traffic and sales" in the Middle East after calls to boycott the brand began soon after the launch of the ongoing Israeli genocide in the Gaza Strip.

CEO Laxman Narasimhan mentioned during a post-quarterly earnings conference call that the boycott has affected the chain beyond the Middle East and in the United States as well.

Reports indicate that Starbucks has witnessed a decrease in customer traffic at its US stores starting in mid-November. Narasimhan stated that the company's performance during the first quarter of the 2024 fiscal year did not meet the projections set by analysts.

At the end of 2023, it was reported that Starbucks had lost almost $11 billion in market value, due to intense boycotts and employee strikes in support of Palestine.