McDonald’s Reclaims Israeli Franchise Amidst Middle East Crisis

Kos Temenes
By Kos Temenes
April 6, 2024News
McDonald’s Reclaims Israeli Franchise Amidst Middle East Crisis
A McDonald's restaurant's iconic "golden arches" logo next to a giant coffee cup of its "Aroma" trademark bearing the label in Hebrew characters in the Israeli Dead Sea resort town of Ein Bokek on March 27, 2021. (Emmanuel Dunand/AFP via Getty Images)

Fast food chain McDonald’s has announced that it will buy back its Israeli franchise amid ongoing conflict in the Middle East.

The company announced on April 4 that Omri Padan, the CEO and owner of Israeli company Alonyal Limited, would be selling its license back to McDonald’s.

“For more than 30 years, Alonyal Limited has been proud to bring the Golden Arches to Israel and serve our communities. We’ve grown the brand to be the leading and most successful restaurant chain in Israel and are grateful to our management, employees, suppliers, and customers who made this possible,” Mr. Padan said in a statement. “We are encouraged by what the future holds.”

Alonyal operates a total of 225 McDonald’s restaurants with more than 5,000 employees.

“Upon completion of the transaction, McDonald’s Corporation will own Alonyal Limited’s restaurants and operations, and employees will be retained on equivalent terms,” the statement said.

The companies did not disclose the terms of the transaction.

Jo Sempels, the McDonald’s President of International Developmental Licensed Markets, issued a statement thanking Alonyal for its longstanding business and brand in Israel.

“McDonald’s remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward,” Mr. Sempels said.

War and Calls for Boycott

McDonald’s announced back in February that the ongoing unrest in the region has been impacting its business.

According to the company’s 2023 financial report, throughout fiscal 2023, the company saw a mere 0.7 percent increase across its licensed markets business in its final quarter, which includes most of its Middle East locations. The company attributes this increase to the impact of the war between Israel and Hamas.

Calls for a boycott of the company prompted by Muslim-majority countries followed after McDonald’s Israel gave away thousands of free meals to Israeli forces and citizens following Hamas’s surprise terror attack on Oct. 7.

Despite being a global chain, McDonald’s operates franchises that are locally owned and which operate autonomously.

CEO Chris Kempczinski said earlier this year that several other markets across the Middle East have also been affected by the conflict in the region.

Other major Western fast-food chains, including Starbucks, have also been criticized by pro-Palestinian groups for alleged financial ties to Israel.

As of yet, McDonald’s has not disclosed when the purchase will be finalized. However, the company said the closing date is subject to certain conditions and will be concluded in the coming months.

Reuters contributed to this article.

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