In a strategic move aimed at reshaping its presence in the Middle East, McDonald’s has announced its decision to repurchase all of its restaurants in Israel from its longtime franchisee, Alonyal Limited.
The decision comes amid a backdrop of slumping sales and escalating boycott threats in the region, largely catalysed by controversies surrounding free meal initiatives for Israeli soldiers.
The Chicago-based fast-food giant revealed on Friday its plans to buy Alonyal Limited, the owner and operator of 225 McDonald’s restaurants across Israel.
Financial specifics of the deal were not disclosed, although the transaction is anticipated to conclude within the upcoming months.
McDonald’s emphasised its commitment to the Israeli market, stating that it intends to manage the restaurants directly and retain over 5,000 employees.
“McDonald’s remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward,” said Jo Sempels, McDonald’s president of international developmental licensed markets, in a statement.
Alonyal Limited has been integral to McDonald’s presence in Israel for over three decades. However, the franchisee found itself embroiled in controversy last October when it announced via social media that McDonald’s would be providing free meals to Israeli soldiers.
The announcement sparked widespread boycotts across the Middle East and in Muslim-majority countries such as Malaysia and Indonesia. McDonald’s also reported a notable impact on sales in regions with significant Muslim populations, including France.
McDonald’s CEO, Chris Kempczinski, addressed the challenges faced by the company earlier this year, acknowledging the complexity of the situation.
He said: “So long as this conflict, this war, is going on… 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.”
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