McDonald's results still suffer from boycott linked to the war in Gaza

The American fast food chain McDonald's said on Tuesday that its results continued to suffer in the first quarter of the conflict in Gaza, after calls for a boycott. “The group's turnover and results continued to be negatively impacted by the war in the Middle East,” the group said in a statement, expecting this to last “as long as the war continues.”

The fast food giant became a prime target after its franchise in Israel announced in November that it was offering thousands of free meals to the Israeli army. On April 4, he announced an agreement to buy the Alonyal group, owner of 225 franchised restaurants in Israel which had held the license for more than thirty years. Some 95% of the more than 42,000 restaurants located in 115 countries are franchises, which pay the group royalties (percentage of sales) after an initial payment for the purchase of the brand license.

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The negative effect of the conflict in Gaza can be seen in its Developing International Franchise Markets branch, whose turnover fell year-on-year by 3% in the first quarter to $409 million. And it recorded an operating loss of 25 million, compared to a profit of 45 million dollars. The group specifies that it has provided “insignificant” assistance, in the form of royalty reductions and/or deferred payments, to some of these franchisees. Concerning McDonald's as a whole, turnover still increased by 5% in the first quarter to $6.17 billion and its net profit increased by 9% to $1.93 billion. Reported per share and on a comparable basis - a benchmark for the markets - the net profit came to $2.70 (2% over one year), when analysts were expecting $2.72.

Chris Kempczinski, boss of the group, noted in the press release that American consumers “have been even more selective for each dollar spent”. In the United States, McDonald's achieved sales of $2.51 billion (3%). He explains that he has benefited from an increase in the average ticket thanks to “strategic price increases on the menu” and targeted advertising campaigns, and from persistent growth in digital sales and deliveries. Internationally (excluding franchisees), activity increased by 7% to $2.94 billion with sales driven by the United Kingdom and Germany, which partially offset the decline in France.

During the presentation of the annual results, Chris Kempczinski indicated that the effect of the boycott was being felt in the Middle East but also in predominantly Muslim countries (Malaysia, Indonesia) or with a large Muslim population, such as France. In electronic trading before the opening of the New York Stock Exchange, McDonald's shares rose 0.17%.