McDonald’s Quarterly Sales Miss Target Amid Gaza Conflict Fallout

McDonald’s CEO, Chris Kempczinski, attributed the fast-food giant’s failure to meet its first quarterly sales target in nearly four years to the conflict in Gaza. Kempczinski expressed disappointment over the impact of the war on sales in Middle Eastern countries and other Muslim-majority nations like Malaysia and Indonesia. He stated that as long as the conflict persists, significant improvement in sales is not expected.

Kempczinski described the situation as a “human tragedy” that weighs on brands like McDonald’s. During October-December, sales growth in the Middle East, China, and India division only reached 0.7 percent, falling far below the market’s expectation of 5.5 percent.

The decline in sales followed a call for a boycott of McDonald’s by customers in Muslim countries after its Israeli franchisee donated thousands of free meals to the Israeli military. Subsequently, franchisees in various Muslim-majority nations distanced themselves from these donations and pledged millions of dollars in aid to Palestinians in Gaza.

While McDonald’s is a prominent US brand, most of its restaurants globally are locally owned and operated. Kempczinski noted that the conflict and associated misinformation were significantly impacting business in the region.

McDonald’s, along with other Western brands, faced boycotts due to perceived support for Israel. Starbucks, for instance, recently revised its annual sales forecast downwards, citing a decline in business in the Middle East.

Despite challenges in Muslim countries, McDonald’s reported relatively strong global sales growth of 3.4 percent, albeit lower than the previous quarter’s 8.8 percent. Kempczinski expressed confidence in the resilience of the business amid ongoing macro challenges expected to persist in 2024.