McDonald’s is buying all 225 of its restaurants in Israel, the company announced Thursday.
The burger giant has been in the country for more than 30 years in partnership with Alonyal Limited.
“We thank Alonyal Limited for building the McDonald’s business and brand in Israel over the past 30 years. McDonald’s remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward,” said Jo Sempels, president of International Developmental Licensed Markets (IDL), in a statement.
Alonyal was mired in controversy last year. After Hamas militants killed thousands of soldiers and civilians in early October, the franchisee announced that it would offer free meals to Israeli soldiers. Fellow franchises in the Middle East distanced themselves from Alonyal and instead pledged support to Gaza, a city in Palestine that was also hit with bombardments and thousands of deaths.
McDonald’s, while experiencing growth in most regions, faces challenges in the Middle East due to the Israel-Palestine conflict. During the chain’s Q4 earnings call, CEO Chris Kempczinski expressed concern, telling investors, “It’s a human tragedy what’s going on. And I think that does weigh on brands like ours.” The company anticipates continued negative effects on sales and revenue as long as the conflict persists. The chain has been hit with boycotts around the region.
The brand’s IDL segment experienced positive same-store sales in all geographic regions except for the Middle East, which dragged it to an overall 0.7 percent increase in the fourth quarter. For perspective of how this segment was performing before the war began, IDL same-store sales rose 10.5 percent in Q3, 14 percent in Q2, and 12.6 percent in Q1.
When the transaction is finalized, McDonald’s will own Alonyal Limited’s restaurants and operations, and employees will be retained on equivalent terms.
“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. We are encouraged by what the future holds,” Alonyal CEO Omri Padan said in a statement.
McDonald’s isn’t the only brand dealing with issues in the Middle East. U.S. consumers boycotted Starbucks due to perceptions regarding its stance on the Israel-Palestine conflict, leading to decreased traffic in late 2023. CEO Laxman Narasimhan addressed the issue during the Q1 earnings call, expressing distress over the regional violence and emphasizing Starbucks’ condemnation of violence, hate, and weaponized speech. He noted the significant impact on traffic and sales, highlighting the company’s focus on supporting partners and stakeholders affected by the conflict.
