McDonald’s and Starbucks share the honor of being the biggest (and, at least in the past, the best) at what they do.
But now they have three other unwanted things in common.
Both have been criticised for raising prices over the past two years, causing both to lose customers, as they admitted in their latest results this week.
On Monday, McDonald’s reported that its sales had fallen for the first time in years. The next day, Starbucks reported that its sales had fallen for the second consecutive quarter.
But thirdly, both have also been subject to boycotts for their apparent support of Israel.
McDonald’s missed its earnings and revenue estimates for the second quarter of the year
Chris Kempczinski, McDonald’s chairman and CEO, admitted that boycotts have been harmful
McDonald’s CEO Chris Kempczinski summed up the problem when he spoke to CNBC on Wednesday.
He said the channel had been the target of organised boycotts following the outbreak of the war between Israel and Hamas last October.
“We are seeing that Western brands have been targeted in some of the events that have occurred following the outbreak of war in the Middle East,” Kempczinski told the broadcaster on Wednesday.
“It’s a terrible situation in terms of what’s happening there and it’s affecting our business in some markets.”
Kempczinski clarified that the franchise “is not taking sides in this.”
“For us, what we are looking for is to support the communities and that is what we are going to continue doing here,” he added.
The boycott was sparked after an Israeli franchisee, Omri Padan, offered free meals to Israeli soldiers entering Gaza in the days following the Hamas terror attacks on October 7.
The boycott is being carried out by Boycott, Divestment and Sanctions (BDS), a non-violent movement seeking to pressure Israel over its conduct in the war.
“McDonald’s is now really feeling the pressure of BDS,” said Omar Barghouti, co-founder of the movement. He told fortune on Tuesday.
“Its share price is falling rapidly and its sales are declining globally, mainly due to the global #BoycottMcDonalds campaign we launched late last year,” Barghouti added.
McDonald’s shares have fallen 10 percent since the beginning of the year.
Starbucks is experiencing declining sales and faces continued pressure from boycotts.
Starbuck’s chief executive Laxman Narasimhan said the boycott was sparked by “misinformation”
Starbucks has also been the target of a boycott after suing the Workers United union, which represents baristas at more than 470 US locations.
The company said a pro-Palestinian social media post by the union damaged its reputation.
Starbucks CEO Laxman Narasimhan said the boycott was fueled by “misinformation” about the company’s position on the dispute, but he did not quantify how damaging the backlash has been.