American restaurant giants McDonald's and Starbucks have pointed fingers at the ongoing conflict between Israel and Hamas as the reason for a decline in sales towards the end of 2023.

On Monday, February 5, McDonald's stock fell roughly 4% as the fast food giant admitted that an overall drop in sales in the Middle East contributed to its revenue deficit in the fourth quarter, as reported by the Hindustan Times.

Meanwhile, there was an almost 2% decline in Starbucks shares since Tuesday, Feb. 6, when the firm disclosed that the continuing conflict impacted its sales in the United States in the last quarter of the year.

Customers have mostly boycotted McDonald's due to their perception that the corporation supports Israel, which has failed to fulfill a substantial sales objective. Earlier, McDonald's acknowledged the conflict's impact and blamed misinformation for it.

Some Western businesses have been the targets of anti-Israel protests and boycotts, including McDonald's, Starbucks, and Coca-Cola.

Impact on McDonald's

McDonald's CEO Chris Kempczinski lamented the unfortunate effect of the conflict on sales in Muslim-majority nations like Indonesia and Malaysia and the Middle East more generally.

"So long as this conflict, this war is going on ... we're not expecting to see any significant improvement in this," Kempczinski told investors, according to Fox59. "It's a human tragedy ... and I think that that does weigh on brands like ours."

Franchisees own and run the vast majority of McDonald's, which has more than 40,000 locations throughout the globe. Roughly 5% of its outlets are located in the Middle East region.

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Impact on Starbucks

Many conservatives criticized and boycotted Starbucks when Starbucks Workers United, the group in charge of the chain's unionized cafés, expressed solidarity with the Palestinian people. Starbucks sought to distance itself from the tweet by suing the group for trademark infringement.

According to CNBC, Starbucks CEO Laxman Narasimhan said last Tuesday, Jan. 30, that the business is seeing a slide in sales both in the Middle East and in its US cafés. Comparable sales in the US increased by 5% in the chain's fiscal first quarter ending December 31 (2023), despite a precipitous decline in customer visits.

According to Narasimhan, the foot traffic lag in the US was mostly caused by customers who seldom came. Starbucks is considering releasing new drinks in an attempt to increase demand.

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