Firms operating US fast food brands in Indonesia and Malaysia are experiencing a suspension of multimillion-dollar stake sales from General Atlantic and CVC amid increasing protests to boycott Israeli-supporting brands, such as Starbucks, KFC, and Pizza Hut.

The companies operating the brands under a franchise have constantly argued that the stores are domestically owned.

General Atlantic halted the sale of its 20% stake in Indonesia's Starbucks operator Map Boga Adiperkasa in December, as per two sources familiar with the situation. The operator has a market capitalization of $285 million and is one of the country's largest fast-food franchise operators with a value of about $54 million.

One person familiar with General Atlantic’s strategy revealed, “It was impossible to sell a stake as a growth opportunity when sales are down, expansion plans are being scaled back, employees are being harmed in stores and there is no sign of the boycott ending."

"I don't think that me boycotting these brands would affect them."

Think again.#PalestineGenocide #GazaUnderAttack pic.twitter.com/rGkj8vVwKt

— Al Mayadeen English (@MayadeenEnglish) October 30, 2023

One of Europe’s biggest private equity firms, CVC Capital Partners, stopped the sale of its 21% stake in the country operator of KFC and Pizza Hut in Malaysia - QSR Brands - according to two other sources. One of these sources revealed that there were several reasons, including not getting the desired valuation as Malaysia’s QSR is privately owned and does not reveal financials.

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Local media reports say that the value was at more than RM1.2bn ($252mn) last year.

Nirgunan Tiruchelvam, head of consumer and internet at the advisory group focused on the Asia-Pacific region, Aletheia Capital, said, “People are shifting from food and beverage brands to beauty brands. The boycott is much more substantial now as opposed to symbolic."

Unilever, which owns Dove and Knorr, revealed in February that its Indonesia sales plunged 15% in the fourth quarter of 2023 due to boycotts, while Starbucks Indonesia claims it is not in any way tied with the war on Gaza and released a website statement saying it did not provide any financial support to "Israel".

According to Calista Muskitta, an analyst at Indonesian bank BCA Sekuritas, brands in the mid-to-low price range have been most impacted, such as Pizza Hut, which has rebranded some of its outlets to the name “Ristorante”, which Muskitta sees as an attempt to blunt the boycott impact but with little success.

Mitra Adiperkasa, the Indonesian retail company that owns 79% of Starbucks operator Map Boga Adiperkasa, declared to analysts in April that even though there was a plan to open 100 food and beverage stores this year, the target is now half of that due to boycotts. 

Berjaya Food, which operates Starbucks in Malaysia, reported a net loss of RM42.6mn ($8.8mn) in the last three months of 2023, as opposed to a net profit of RM35.5mn ($7.4mn) a year prior. 

It is worth noting that Malaysian tycoon Vincent Tan, founder of Berjaya Food’s parent company, said in March the boycotts were “unnecessary”. 

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Tiruchelvam added that over 80% of employees are Malaysian, and the US brand does not have any share in the operations, noting that even though customers may get bored eventually, the boycott campaigns remain in “full swing”.