McDonald's has been the subject of boycotts ever since owner Alonyal announced it would provide free meals to the Israeli military.
McDonald's has said it will buy its 30-year Israel franchise from Alonyal, taking back ownership of 225 outlets that employ more than 5,000 people.
The American fast-food chain has been subject to boycotts and protests since Alonyal announced it would donate free meals to the Israeli military after the October 7 attack by the Palestinian group Hamas.
McDonald's is a global company, but its franchisees are often locally owned and operate autonomously. Its CEO Chris Kempczynski said the company has seen a “meaningful business impact” in many markets in the Middle East and some outside the region due to the Israel-Hamas conflict.
“For more than 30 years, Alonyal Limited has been proud to bring the Golden Arches to Israel and serve our communities,” said Omri Padan, CEO and owner of Alonyal. Report Thursday.
McDonald's added that it is “committed to the Israeli market and to ensure a positive employee and customer experience in the market”.
After the transaction closes in the coming months, McDonald's will retain its employees and own Aloniel's outlets and operations. The companies did not disclose the terms of the transaction.
'It's a human tragedy'
In February, Kempczynski said it had a “disappointing” effect on sales in the Middle East and other Muslim-majority countries such as Malaysia and Indonesia.
“As long as this conflict, this war is going on … we don't expect any significant progress in this,” Kempczynski said on a conference call.
“It's a human tragedy, what's happening, and I think it weighs on brands like us.”
The fast-food chain's sales growth for the Middle East, China and India was just 0.7 per cent in October-December – below market expectations of 5.5 per cent.
The decline comes after customers in Muslim countries called for a boycott of McDonald's in response to Alonial's announcement that franchisees in countries including Egypt, Jordan and Saudi Arabia had pulled back on donations and pledged millions of dollars in aid to Palestinians in Gaza. .
Although Chicago-based McDonald's is known as one of America's most iconic brands, most of its restaurants around the world are locally owned and operated.
Another major Western fast-food chain, Starbucks, has shunned campaigns for its pro-Israel stance and alleged financial ties to Israel.
CEO Laxman Narasimhan told reporters in February that Starbucks had seen a “significant impact on traffic and sales” in the Middle East, but protesters in the US also campaigned against the Seattle-based company, calling for a stand against Israel.
US-based pizza maker Domino's, along with franchisees around the world, has faced backlash after posts on social media claimed without evidence that it had given free meals to Israeli soldiers.
Sole store sale of the brand dip In Asia it grew 8.9 percent in the second half of 2023, mainly as consumers in Malaysia associate it with the US, an Israeli ally, a company official said.
