The Israel-Hamas conflict is to blame for McDonald’s and Starbucks’ reduced sales

McDonald’s shares dropped by about 4% on Monday after the company revealed that its fourth-quarter revenue shortfall was partly caused by a slowdown in Middle Eastern sales. Since the business revealed on Tuesday that the war had a negative impact on its U.S. sales in the last three months of the year as well, Starbucks’ stock has dropped by almost 2%.

The two massive restaurant chains became some of the biggest American businesses to state that the Middle East crisis had a negative impact on sales and would probably continue to do so in the coming quarters. It’s uncertain if this decline will affect other restaurant companies as well.

After Starbucks Workers United, which is responsible for hundreds of the chain’s unionized cafés, posted a support post for Palestinians and faced criticism from conservatives, Starbucks became the subject of boycotts. Starbucks sued Workers United for trademark infringement in an attempt to disassociate itself from the tweet, which the union removed.

In the Middle East, McDonald’s experienced a decline in fourth-quarter sales subsequent to its Israeli licensee providing discounts to military personnel. This move prompted a number of boycotts from consumers who were against the country’s attack in Gaza. Typically, 2% of McDonald’s global sales and 1% of its global profitability before interest and taxes come from the Middle East.

In addition to McDonald’s and Starbucks, some activists have demanded boycotts of Domino’s Pizza, Papa John’s, Burger King from Restaurant Brands International, and Pizza Hut from Yum Brands.