The effects of widespread popular boycott campaigns for products and brands that support Israel in its war on the Gaza Strip have begun to appear with the approaching announcement of the financial results for the last quarter of 2023.
Yesterday, Friday, McDonald’s shares declined for the second session in a row, losing 1.83% in the total of the last two sessions. Starbucks Group shares also fell by 0.6% in the last trading sessions of the week.
Chris Kempinski, CEO of McDonald’s, said last Thursday that a number of markets in the Middle East, and others outside the region, are witnessing a “tangible impact on business.” Because of Israel’s war on Gaza, in addition to what he described as “misinformation” about the brand, referring to the impact of boycott campaigns.
He wrote in a post on LinkedIn, “In every country we operate in, including Islamic countries, McDonald’s is proudly represented by local owners, who work tirelessly to serve and support their communities, employing thousands of their citizens.”
The McDonald’s restaurant chain found itself a major target after the company’s branch in Israel announced that it had provided thousands of free meals to the Israeli army, which angered Arab public opinion.
recognition
Analysts confirmed to Al Jazeera Net that the statements of McDonald’s officials regarding its business in the Middle East region are evidence that the popular boycott affected its financial results and the results of the rest of the companies that support Israel.
Mostafa Fahmy, CEO of Strategies and Emerging Markets at Fortress Investment Company, said, “These statements are a clear acknowledgment of the boycott’s negative impact on McDonald’s and other companies such as Starbucks and others.”
He added that this is in anticipation of any shock that may appear with the announcement of the annual financial results of McDonald’s and other companies in light of the clear and direct impact of the boycott.
to retreat
Fahmy pointed out that any negative effects on the financial results in terms of revenues, profits and distributions will lead to a decline in the value of the company’s shares.
McDonald’s shares fell about 1% in the wake of the CEO’s statements, closing at $291.74 in Thursday’s session.
The stock continued its losses, falling to $289.04 at the end of yesterday’s session on Friday, and it is classified among the stocks with the weakest performance at the close, with a decline of about 1% as well.
Since the launch of Operation Al-Aqsa Flood on October 7, 2023, until Friday, January 5, McDonald’s stock lost in 25 trading sessions and recorded its lowest level – during this period – in the October 12, 2023 session, when it reached $245.88. .
Fahmy expected that the performance of the regional branches and commercial franchisees of companies affected by the boycott would have been affected by no less than 70% as a result of the war and boycott extending for more than 90 days, meaning about an entire financial quarter.
He expressed his conviction that the effects would affect the operational strength, employment, and wages of these companies. He also expected that these negative effects would extend to “at least the first quarter of 2024.”
McDonald’s is one of the most famous brands in the world, and is closely linked to the United States, although the vast majority of its restaurants are owned by individuals or local companies, under the commercial franchise system.
By fiscal year 2022, the company has granted franchise and operating rights to approximately 40,275 McDonald’s restaurants, in more than 100 countries.
The fast food chain achieved total annual revenues of $23.18 billion in the year before last.
For its part, Starbucks shares fell 0.6% yesterday, Friday, to close at $92.99, the lowest level since the first session of last November.
Since the start of the Al-Aqsa deluge until yesterday’s session, Friday, Starbucks’ stock has declined in 37 sessions, while it has recovered in 26 other sessions.
The global coffee company’s market capitalization lost billions of dollars due to the effects of the boycott, workers’ strikes to modernize wages, and the failure of promotion campaigns.
Support local products
While the boycott affected brands that support Israel, this boycott represented an opportunity to support alternative local products.
Demand for many local products has increased in Arab countries, amid demands for the necessity of continuing and developing these products to compete in terms of quality and cost.
Some Western brands are feeling the impact of the boycott in Egypt, Jordan and other countries. The boycott has now spread to some countries outside the Arab region, including Malaysia.
Walid Fuqaha, Investment Director at Al Ahly Brokerage Company, said that the boycott campaigns will constitute an opportunity for local Arab companies and products, especially if they take advantage of these circumstances and offer products similar to those offered by major foreign companies.
In an interview with Al Jazeera Net, Fuqaha expressed his belief that this goal can be achieved, pointing to similar experiences that occurred in Russia when major international companies such as McDonald’s and Starbucks withdrew in the wake of the war on Ukraine as a form of sanctions, replacing them with local products and brands in the same shape and style.
He did not rule out that Arab markets would reach the stage of “replacing” the local product with the foreign product, but he linked this to providing a commodity at a lower price and of similar quality.
Jurists believed that providing the alternative product would enhance the chance of success of boycott campaigns for brands supporting Israel.
