McDonald’s and Starbucks Blame WHAT for Slow Sales?

(DailyEmailNews.com) – Confronted with disappointing earnings figures directly affecting economic growth and job creation, leading American chains McDonald’s and Starbucks recently shared that the Israel-Hamas war negatively impacted their sales towards the end of last year.

After revealing a dip in Middle East sales affecting its overall fourth-quarter revenue McDonald’s recently saw its stock price drop almost 4%. Similarly Starbucks experienced a roughly 2% decline in its stock value after announcing that the same conflict also reduced its U.S. sales in the last quarter.

These two companies are among the most prominent U.S. businesses to report sales downturns due to the Middle East turmoil, which points to possible ongoing demand challenges.

Starbucks faced boycotts after some of the company’s unionized locations represented by Starbucks Workers United expressed support for Palestinians on X, which prompted backlash primarily from conservative circles.

Starbucks then attempted to distance itself from the controversial post, which was later removed, and took legal action against Workers United for trademark infringement. Starbucks’ CEO Laxman Narasimhan pointed out that the boycotts impacted their U.S. operations while sales in the Middle East suffered due to the ongoing war.

In this vein the company saw a 5% increase in U.S. same-store sales during the quarter ending December 31 but customer visits sharply decreased particularly among less frequent patrons. In response Starbucks plans to boost interest through more precise promotions and new beverage options.

Conversely McDonald’s experienced a sales decline in the Middle East following boycotts from people opposing Israel’s actions in Gaza after the company’s Israeli licensee decided to offer discounts to soldiers.

The Middle East usually makes up around 2% of McDonald’s global sales and 1% of its global earnings before taxes and interest. CEO Chris Kempczinski revealed weaker sales in the Middle East and in predominantly Muslim countries such as Malaysia and Indonesia, and noted that pricing issues also diminished demand in France.

The global situation has also sparked calls for boycotts against other fast-food companies like Domino’s Pizza, Papa John’s, Burger King (owned by Restaurant Brands International), and Pizza Hut (owned by Yum Brands).