LETTER FROM BEIRUT
Starbucks cafés and McDonald’s restaurants in the Middle East have not been totally deserted. Supermarket shelves are still stocked with bottles of Coca-Cola and Pepsi. But when the time came to take stock, some international companies had to face the facts: As the war in the Gaza Strip entered its ninth month, the boycott campaign against companies accused of supporting Israel was far from painless.
Extremely popular in the region, thanks to the viral powers of social media, the boycott initiative concerns many brands marked by pro-Palestinian activists as being linked to Israel or associated with “American imperialism.” Washington’s unconditional support for Israel in its war against Hamas is generating a wave of anger and indignation. On Tuesday, June 11, the Hamas Ministry of Health counted more than 37,000 deaths in the Gaza Strip since the start of the war in October 2023.
American coffee chain Starbucks has been paying the price since it sued the Workers United Union confederation – representing unions at 370 Starbucks outlets in the US – in October 2023, for posting a message of solidarity with Palestine on social media. In March, the Kuwaiti group Alshaya, which manages Starbucks franchises in the Middle East and North Africa, announced the layoff of 2,000 employees in the region, or 4% of its payroll, as a result of falling sales.
The following month, the Seattle-based parent company reported a 15% drop in second-quarter net income. Starbucks director general Laxman Narasimhan acknowledged that this poor performance, due to a significant drop in sales in the US and the Middle East, was the result of a “misperception around its brand, tied… to the Israel-Hamas war.”
Changing consumer behavior
However much the company may reiterate that it has no “political agenda” or defend itself from using “our profits to fund any government or military operations anywhere,” the reputational damage is likely to be long-lasting. In an attempt to repair their image, in April the Starbucks Charitable Foundation and the Alshaya Group announced a $3 million donation to the non-governmental organization World Central Kitchen to provide one million meals in the Gaza Strip.
Other international companies have also reported sluggish first-quarter results. Americana Restaurants, which runs the Middle East franchises of fast-food chains such as Hardee’s, KFC and Pizza Hut, reported a near 50% drop in profits due to “persistent geopolitical tensions” in the Middle East and the month of Ramadan.
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