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A boycott sparked by the war in Gaza helped contribute to McDonald\u2019s first quarterly decline in same-store sales since the COVID outbreak in early 2020.\u00a0<\/p>\n
On Monday, the fast food company known for its hamburgers and French fries reported a 1% decline in revenue across all its businesses. But the company pinned the blame on disproportionately lower demand abroad and especially in France, Europe\u2019s third-largest economy behind Germany and the UK.\u00a0<\/p>\n
\u201cFrance is one of the markets that has a\u00a0higher Muslim population<\/a>,\u201d CEO Chris Kempczinski told analysts on Monday. \u201cAnd so when you think about the Middle East, the impact that we\u2019re seeing in France has been more than maybe in other markets because of that population.\u201d\u00a0<\/p>\n \u201cSo there\u2019s a lot that the team is looking at doing on how do we make sure we\u2019re telling our story from a marketing standpoint at the local level,\u201d he said.<\/p>\n Fortune reached out to McDonald\u2019s for further comment or clarification, but could not immediately reach a company official authorized to speak on its behalf.<\/p>\n France has one of the highest Muslim populations in Europe.<\/p>\n McDonald\u2019s added that international sales in emerging markets saw the biggest percentage decline in sales at 1.3% due both to the war in Gaza as well as declines in China. By comparison, its domestic U.S. market suffered only a 0.7% decrease in like-for-like revenue as price hikes could not offset lower foot traffic.<\/p>\n It is not just lost turnover that threatens McDonald\u2019s The chain said that it will continue to provide assistance to its franchisees for the duration of the conflict in Gaza. This includes royalty relief and\/or the deferral of cash collection for certain business owners in the Middle East, although the company characterized it as an \u201cimmaterial\u201d amount.<\/p>\n \u201cThe company is monitoring the evolving situation, which it expects to continue to have a negative impact on systemwide sales and revenue as long as the war continues,\u201d it said in its 8-K regulatory filing<\/a> on Monday.<\/p>\n The owner of McDonald\u2019s Israeli franchisee, Omri Padan, had sparked the boycott after offering thousands of free meals to soldiers in Israel\u2019s military conducting operations in Gaza in the days following the October 7th terror attacks by Hamas.<\/p>\n The national committee of Palestinian-led Boycott, Divestment and Sanctions (BDS), a non-violent movement aimed at pressuring Israel over its treatment of Palestinians, thereupon called on consumers worldwide to avoid dining at the restaurant chain.\u00a0Some lawmakers in the U.S., U.K., and Israel have accused the group of antisemitism, which it denies.<\/p>\n Kempczinski has argued the loss of business is the result of \u201cmisinformation\u201d affecting a number of brands he called \u201cdisheartening and ill-founded<\/a>\u201d, adding the chain was proud to be represented by owner-operators supporting their local communities, including in Muslim ones.<\/p>\n \u201cMcDonald\u2019s is now really feeling the BDS heat,\u201d said Omar Barghouti, co-founder of the movement, in a statement to\u00a0Fortune\u00a0<\/em>on Tuesday. \u201cIts share price is rapidly declining and its sales are falling globally, mainly due to the worldwide\u00a0#BoycottMcDonalds campaign that we launched late last year.\u201d\u00a0<\/p>\n The stock has lost nearly 11% of its value since the start of January, heavily underperforming the 15% gain in the broader S&P 500 index.\u00a0<\/p>\n In January, Kempczinski blamed Padan\u2019s actions as having a \u201cmeaningful business impact<\/a>\u201d,\u00a0<\/p>\n\u2018Feeling the BDS heat\u2019<\/h2>\n