Financing

McDonald's is buying its operator in Israel

The fast-food giant has an agreement to buy Alonyal Limited, the country’s franchise owner. The market has struggled since the outbreak of the Middle East conflict.
McDonald's Israel
McDonald's is buying its Israeli market restaurants. | Photo: Shutterstock

McDonald’s said on Thursday that it has an agreement to buy out its Israel franchise owner, Alonyal Limited, amid weak sales in the market brought on by the Gaza conflict.

Terms of the deal were not disclosed. But the Tel Aviv-based Alonyal opened the first McDonald’s in the country 30 years ago and grew the market to 225 locations with some 5,000 employees.

“McDonald’s remains committed to the Israeli market and to ensuring a positive employee and customer experience in the market going forward,” Jo Sempels, president of McDonald’s International Developmental Licensed Markets (IDL), said in a statement.

McDonald’s has acknowledged sales challenges in the Middle East, following the conflict that flared up in October.

Alonyal was at the center of this, as McDonald’s Israel announced plans to give away free meals to members of the Israeli Defense Forces.

McDonald’s in early January acknowledged that the conflict was causing a “meaningful business impact” in several markets in the Middle East. CEO Chris Kempczinski blamed the challenges on “misinformation” about the company’s views.

He called it “disheartening and ill-founded.”

Same-store sales increased less than 1% in the IDL markets, McDonald’s executives said in February. “We do not expect to see meaningful improvement until there is a resolution in the Middle East,” CFO Ian Borden told analysts.

McDonald’s was not the only chain to feel the impact of the Middle East conflict. Starbucks, too, has blamed misinformation on its views on the conflict for sales challenges in some markets. Domino’s Pizza Enterprises, which is based in Australia and operates Domino’s locations in several countries, including parts of Asia, blamed the conflict for weak sales in Malaysia.

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