Starbucks and McDonald’s both face a major problem – and it’s not just plunging sales or high prices
McDonald’s and Starbucks share the honor of being the biggest — and historically, at least, the best — at what they do.
But now they have three other unwanted things in common.
They have both been criticised for raising prices over the past two years, which has led to them both losing customers – as they admitted in their latest earnings reports this week.
On Monday, McDonald’s reported its sales had fallen for the first time in years. The next day, Starbucks reported its second straight quarter of poor sales.
But the third point is that they have both also faced boycotts for their perceived support for Israel.
McDonald’s missed its second-quarter profit and sales estimates
Chris Kempczinski, president and CEO of McDonald’s, admitted that boycotts have been harmful
McDonald’s CEO Chris Kempczinski summed up the problem in an interview with CNBC on Wednesday.
He said the chain faced organized boycotts after the outbreak of war between Israel and Hamas in October last year.
“We see that Western brands have become targets of what happened after the outbreak of war in the Middle East,” Kempczinski told the broadcaster on Wednesday.
It’s a terrible situation [in terms of] what is happening there and that has consequences for our activities in some markets.’
Kempczinski clarified that the franchise “is not taking sides in this matter.”
“We want to support communities and we will continue to do that here,” he added.
The boycott came after an Israeli franchisee, Omri Padan, offered free meals to Israeli soldiers who invaded Gaza in the days following the October 7 Hamas terror attacks.
The boycott is being carried out by Boycott, Divestment, and Sanctions (BDS), a nonviolent movement that aims to put pressure on Israel over its conduct in the war.
“McDonald’s is really feeling the heat of BDS now,” said Omar Barghouti, co-founder of the movement, Fortune told on Tuesday.
“The stock price is falling rapidly and sales are falling globally, mainly due to the global #BoycottMcDonalds campaign we launched at the end of last year,” Barghouti said.
McDonald’s shares have fallen 10 percent since the beginning of the year.
Starbucks faces declining sales and continued pressure from boycotts
Starbucks CEO Laxman Narasimhan said boycotts were caused by ‘misinformation’
Starbucks has also been hit by a boycott after the company filed a lawsuit against the Workers United union, which represents baristas at more than 470 U.S. stores.
The company claimed that a pro-Palestinian post by the union on social media damaged the company’s reputation.
Starbucks CEO Laxman Narasimhan said the boycott was due to “misinformation” about the company’s position on the conflict, but he did not specify how damaging the avoidance has been.