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The fast-food giant has decided to buy-back all 225 of its Israeli outlets. Whether progressive or performative, the move proves there’s power in protest.
Since October 7th 2023, McDonalds’ global reputation has been heavily tarnished.
The brand’s association with Israeli forces – which was established in the public consciousness when Alonyal Ltd, the franchise which owns nearly all of McDonalds’ Israeli outlets, provided free meals to Israeli troops – has sparked international boycotts. And against all odds, these protests have impacted sales, particularly in the Middle East.
In the branch which includes sales in the Middle East, China and India, growth stood at 0.7% in the fourth quarter of 2023 – McDonald’s first revenue miss in nearly four years.
So, in an effort to curb an already dented image, McDonald’s announced a significant move to buy-back all 225 of its Israeli outlets from Alonyal. The decision serves as a way for McDonald’s to take business back in-house, and ultimately win over alienated customers.
‘An agreement to sell Alonyal to McDonald’s Corporation has been signed’ a brand statement said on Thursday. ‘Upon completion of the transaction, McDonald’s Corporation will own Alonyal Limited’s restaurants and operations, and employees will be retained on equivalent terms.’
At least 33,000 people in Palestine’s Gaza strip have been killed by Israeli forces since October. Ongoing bombing has also triggered mass displacement and what the U.N and World Health Organisation warn is impending famine for more than half a million people.
These statistics have led consumers from across the world, but particularly in Arab and Muslim majority countries, to boycott McDonald’s on the basis of its support for Israeli troops.
Other major brands have also seen stagnant growth due to their ties with Israel. Last week, Starbucks cut its annual sales forecast, partly due to fewer consumers visiting stores in the Middle East.
But despite McDonald’s hopes that a buy-back of Israeli outlets will lead to more control over public discourse, brand experts and consumers are doubtful.
‘Does this mean ‘McDonald’s] will now need to act and offer deals in other areas where reputational damage has been caused?’ a brand management expert (who wished to remain anonymous) told the BBC.
This question highlights the difficulty McDonald’s – and other brands – will face in drawing the damage control line, especially when associated with major socio-political crises.
‘I get it. They are buying back the franchises to regain control but I’m not sure they have’ the brand expert continued.
Online sentiment would suggest this theory is correct. Netizens have responded to news of McDonald’s buy-back with the same rage that supposedly triggered the decision in the first place.
