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A global Domino's operator blames some sales issues on the Middle East

Domino's Pizza Enterprises blamed sales weakness in Asia on consumer rejection of American brands over the Israel-Palestine crisis.
Domino's Malaysia
A Domino's operator said sales softness in Malaysia is due to the Middle East conflict. | Photo: Shutterstock.

Another U.S. brand is blaming sales challenges in certain markets on the reaction to American foreign policy in the Middle East.

This time, Domino’s Pizza Enterprises, the Australia-based operator of Domino’s locations in that country, New Zealand, Asia and Europe, suggested that sales challenges in Asia late last year were due in part to consumer rejection of U.S. brands due to the Israel-Palestine crisis.

The operator said that its same-store sales in Asia declined 8.9% in the second half of last year, contributing to what it called a “clearly disappointing” period. Some of that was due to challenges in Japan.

But the company also said softness in Malaysia contributed to the issue. “It’s well-publicized that American brands in Asia, and I largely talk to Malaysia in this case, have been affected by what’s happening in the Middle East right now,” Don Meij, managing director for Domino’s Pizza Enterprises, said last week in a call with analysts.

Islam is the state religion in Malaysia. The country last month banned Israeli-owned shipping, citing “cruelty against the Palestinian people,” and there was a massive rally in support of Palestinians and protests outside the U.S. embassy in Kuala Lumpur.

U.S. brands of all kinds have aggressively expanded globally. Restaurant chains are some of the most visible symbols of America anywhere in the world. And when conflict arises, they are often subject to protests, vandalism or sales boycotts. The publication Foreign Policy noted in November that “brands are the first casualty of war.”

And some big chains have found themselves in the middle of the conflict. After Hamas attacks on Israel, a McDonald’s franchisee in that country started offering free meals to Israeli soldiers, which has prompted calls for boycotts against that chain.

Earlier this month, McDonald’s CEO Chris Kempczinski acknowledged in a system message that “misinformation” on the company’s views have had a “meaningful business impact” in several markets.

“I also recognize that several markets in the Middle East and some outside the region are experiencing a meaningful business impact and associated misinformation that is affecting brands like McDonald’s,” he wrote. “This is disheartening and ill-founded.”

Starbucks has had an even tougher situation. Starbucks has traded lawsuits with the union representing some of its workers after the union expressed solidarity with Palestinians. The chain has been subject to boycott calls from supporters on both sides of the issue and the chain’s cafes have been victims of vandalism.

That prompted CEO Laxman Narasimhan to denounce violence in a letter to employees in December. “Many of our stores have experienced incidents of vandalism,” he wrote. “We see protestors influenced by misrepresentation on social media of what we stand for.”

“Our stance is clear,” he noted. “We stand for humanity.”

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