McDonald’s to repurchase 225 restaurants from its Israeli franchise after sales decline from anti-Israel boycotts

McDonald’s reported in February weak sales growth in the Middle East after anti-Israel activists boycotted the brand.

By Shiryn Ghermezian, The Algemeiner

McDonald’s Corporation signed an agreement to purchase all of the restaurants that comprise its franchise in Israel, the American fast food chain announced on Thursday after facing an anti-Israel boycott of its stores because of the ongoing war in Gaza.

McDonald’s will buy back all 225 of its restaurants in Israel, which have been owned and operated for more than 30 years by the local licensee Alonyal Limited.

The agreement is “subject to certain conditions” and expected to close in the next several months.

“For more than 30 years, Alonyal Limited has been proud to bring the Golden Arches to Israel and serve our communities,” said Omri Padan, who is the Israeli owner and CEO of Alonyal Limited.

“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. We are encouraged by what the future holds.”

“We thank Alonyal Limited for building the McDonald’s business and brand in Israel over the past 30 years,” said Jo Sempels, president of international developmental licensed markets at McDonald’s Corporation. “McDonald’s remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward.”

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McDonald’s reported in February weak sales growth in the Middle East after anti-Israel activists boycotted the brand because its Israeli licensee offered discounts and free meals to Israeli soldiers and other security personnel who were defending the Jewish state after the Oct. 7 Hamas terrorist attacks launched the ongoing war in Gaza.

Hamas terrorists murdered 1,200 people, mostly civilians, during the massacre last year in southern Israel and a further 253 were taken as hostages back to the Gaza Strip.

McDonald’s CEO Chris Kempczinski said in February that the company experienced a drop in sales in some markets outside the Middle East as well because of the boycotts, including Malaysia and Indonesia, both of which have Muslim-majority populations, and France.

“The company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue as long as the war continues,” McDonald’s said in a regulatory filing at the time.

Branches of McDonald’s in Turkey, Lebanon, Egypt, and Australia were vandalized because of the Israeli franchise’s decision to provide free food and discounts to Israeli soldiers and security forces.

Pro-Palestinian rallies were also held outside several other McDonald’s locations around the world, including in London and the US. Some McDonald’s branches in Muslim countries — including the United Arab Emirates, Saudi Arabia, Egypt, Jordan, Turkey, Lebanon, Oman, and Kuwait — published statements distancing themselves from the Israeli franchise while vowing to donate funds to help humanitarian aid efforts in the Gaza Strip.

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Kempczinski said the boycotts were a result of “associated misinformation” about the company and its stance in the Israel-Hamas war. The McDonald’s Corporation released its own statement explaining its position during the ongoing fighting.

“We are dismayed by the disinformation and inaccurate reports regarding our position in response to the conflict in the Middle East,” it said in November. “McDonald’s Corporation is not funding or supporting any governments involved in this conflict, and any actions from our local Developmental Licensee business partners were made independently without McDonalds’ content or approval.”

“Our hearts are with all of the communities and families impacted by this crisis,” the company continued. “We abhor violence of any kind and firmly stand against hate speech, and we will always proudly open our doors to everyone. We are doing everything we can to ensure the safety of our people in the region while supporting the communities where we operate.”