McDonalds said it would buy back all of its 225 franchised restaurants in Israel, weeks after the company warned that boycotts and protests over the Israel-Hamas war had hurt its business in the Middle East.
The deal, announced on Thursday, would bring all of the stores under the direct management of McDonald’s Corporation. The company did not disclose terms of the deal but said the chain’s 5,000 workers in Israel would keep their jobs.
The move highlighted the deepening political polarization that multinational corporations face during the war, including claims and counterclaims by activists and companies about what both sides say are disinformation campaigns.
McDonald’s operations in the region slumped when the franchises in Israel, run by Alonyal Limited, began donating thousands of meals to Israeli soldiers after the deadly Hamas-led attacks on Oct. 7.
The donations, described at the time by Alonyal as a show of solidarity to support the military and hospital workers, set off boycotts in neighboring countries and prompted McDonald’s franchises in Jordan, Oman, Saudi Arabia, Turkey and the United Arab Emirates to issue statements distancing themselves from the Israeli franchise.
In Kuwait and Qatar, McDonald’s franchise owners also pledged hundreds of thousands of dollars for relief efforts in Gaza. A hashtag, #BoycottMcDonalds, rallied consumers in the Middle East and other majority-Muslim countries to stay away from the fast-food giant’s chains, accusing it of “supporting genocide” in Gaza.
Omri Padan, the Israeli businessman who runs Alonyal, said in a statement on Thursday that his company had expanded McDonald’s franchises into Israel’s most successful restaurant chain over 30 years.
U.S. companies and franchises operating in the region have seen their financial performance flounder as the war persists. Last month, Starbucks franchise operators across the Middle East and Southeast Asia said they were losing significant business because of boycotts, with some having to lay off employees.
Since the Israel-Hamas war began, Starbucks and other companies have been forced to deflect perceptions that they have supported Israel as it has retaliated against Hamas in operations that have killed large numbers of civilians in Gaza. Starbucks and McDonald’s have issued statements denouncing the claims as false, but that has not cooled the calls for boycotts.
In a post on social media in January, Chris Kempczinski, McDonald’s chief executive, said, “Several markets in the Middle East and some outside the region are experiencing a meaningful business impact due to the war and associated misinformation that is affecting brands like McDonald’s.”
“This is disheartening and ill-founded,” he added.
The controversy immediately affected Mr. Padan’s Israeli franchises, which were the subject of what his company said was a disinformation campaign about whose side he was taking in the Israel-Hamas war.
On Oct. 19, after Mr. Padan pledged to provide 4,000 meals a day to the Israeli Defense Forces, McDonald’s Israel posted on social media that it was the victim of false messages suggesting that the burger chain did not support the military.
At the time, the company wrote that it had donated over 100,000 meals to security forces, hospitals and residents in the area attacked by Hamas on Oct. 7.
In other posts, McDonalds Israel said Alonyal would open libel suits “against anyone who spreads fake news against it.”
Mr. Kempczinski said in a call with analysts in February that muted growth at international franchised restaurants at the end of last year reflected weakness in majority-Muslim countries as well as in countries with large Muslim populations, including France.
“Our outlook is, so long as this conflict, this war is going on, we’re not making any plans,” Mr. Kempczinski said. “We’re not expecting to see any significant improvement in this. It’s a human tragedy what’s going on. And I think that does weigh on brands like ours.”
