By Vaibhav Agrawal
First published on Business Upturn Asia

The impact of boycotts on McDonald’s and Starbucks serves as a cautionary tale for multinational corporations, highlighting the risks of inadvertently becoming embroiled in geopolitical disputes. As tensions persist, these companies must navigate the delicate balance between profitability and principles in an increasingly polarized world.

Amidst ongoing global scrutiny, McDonald’s and Starbucks are grappling with the fallout of boycotts prompted by their perceived ties to Israel during the conflict in Gaza. Both iconic American brands have reported significant impacts on their sales and operations, signaling broader repercussions for businesses embroiled in geopolitical controversies.

McDonald’s, a ubiquitous presence in the fast food industry, disclosed that it missed sales targets in certain regions, citing boycotts as a contributing factor. The company acknowledged that the conflict in Gaza had “meaningfully impacted” its performance, particularly in the Middle East, China, and India. Sales growth in these regions fell drastically below expectations, prompting concerns over the long-term implications for the company’s bottom line.

The fast food giant’s troubles escalated following reports that its Israel branch provided free meals to Israeli troops during the conflict, sparking outrage among critics who accused the company of endorsing military actions. Subsequently, calls for a global boycott gained momentum, with social media campaigns urging consumers to boycott McDonald’s products.

Starbucks

Similarly, Starbucks, renowned for its ubiquitous coffee shops worldwide, faced a downturn in sales and slashed its annual forecast in response to the fallout from the conflict. CEO Laxman Narasimhan cited a “significant impact on traffic and sales” in the Middle East, attributing the decline to the company’s perceived association with Israel.

Starbucks’s troubles escalated after Starbucks Workers United, a union representing thousands of baristas across the United States, expressed solidarity with Palestinians in a social media post during the Gaza conflict. The post, swiftly deleted, prompted backlash and legal action from Starbucks, which accused the union of trademark infringement and alleged damage to its reputation.

The repercussions of these controversies extend beyond financial metrics, underscoring the intricate interplay between politics and commerce on the global stage. As companies navigate complex geopolitical landscapes, they face mounting pressure to align their actions with public sentiment and avoid entanglement in contentious issues.

The impact of boycotts on McDonald’s and Starbucks serves as a cautionary tale for multinational corporations, highlighting the risks of inadvertently becoming embroiled in geopolitical disputes. As tensions persist, these companies must navigate the delicate balance between profitability and principles in an increasingly polarized world.

Coca-Cola

Coca-Cola, a longstanding symbol of American culture, has once again found itself embroiled in controversy over its historical ties to Israel. From 1967 to 1991, the Arab League officially boycotted Coca-Cola for its involvement in building a bottling plant in Israel. Decades later, the brand’s red logo is back on lists of boycotted brands circulating on social media channels, reigniting tensions in the region.

Despite no recent triggers from the company, Coca-Cola’s past affiliations with Israel, coupled with its status as an American brand, appear to have sparked renewed calls for boycotts. In November, Turkey’s parliament voted to remove Coca-Cola products from shops and restaurants on its grounds, resulting in a significant 22 percent drop in sales reported by Coca-Cola’s Turkey distributor in the last quarter of 2023.

Similarly, in Egypt, the boycott of Coca-Cola and other American soft drinks has paved the way for the revival of local soda brands like Spiro Spathis, which has witnessed a surge in sales amidst the growing anti-American sentiment.

Domino’s

Meanwhile, Domino’s, the US-based pizza giant with a global presence, is facing blowback over unsubstantiated claims of providing free food to Israeli soldiers. Although no evidence supports these allegations, social media posts have fueled consumer backlash against the brand. In Asia, Domino’s same-store sales dipped by 8.9 percent in the second half of 2023, with consumers in Malaysia associating the brand with the US, a staunch ally of Israel.

The decline in sales comes amidst widespread protests in Malaysia against Israel’s actions in Gaza, with thousands rallying for an end to the conflict. Prime Minister Anwar Ibrahim’s office announced in December a ban on all Israeli-owned, Israeli-flagged, or Israel-destined ships from docking in Malaysian ports, underscoring the country’s stance on the issue.

Don Meij, managing director for Domino’s Pizza Enterprises, acknowledged the impact of geopolitical tensions on American brands in Asia, particularly in Malaysia. The situation underscores the challenges faced by multinational corporations operating in politically sensitive regions, where consumer sentiment can be heavily influenced by global events.

As Coca-Cola and Domino’s navigate the fallout from boycotts and declining sales, the broader implications of their involvement in geopolitical conflicts underscore the need for brands to carefully navigate the complex intersection of politics and commerce.