Starbucks franchise operators across the Middle East and Southeast Asia are losing significant business amid boycotts linked to the Israel-Hamas war, and at least one has started laying off employees.
Alshaya Group, a Kuwait-based franchise operator that owns the rights to operate Starbucks in the Middle East, confirmed on Tuesday that it planned to cut 2,000 jobs across the region “as a result of the continually challenging trading conditions over the last six months.”
Alshaya Group, which operates over 1,900 Starbucks shops in the Middle East and North Africa that employ 19,000 workers, said in a statement that it would provide affected employees and their families with “the support they need.”
The cuts added to drama playing out in the United States, where Starbucks management and a union of Starbucks workers sued each other after the union expressed solidarity with Palestinians.
Starbucks has been forced to deflect perceptions that the company has supported and even funded the Israeli government and the Israeli military. It issued a lengthy statement in October describing the claims as false, but that has not cooled the calls for boycotts in numerous regions.
Boycotts have also been hurting sales at Starbucks franchises in Malaysia, a majority Muslim country. Berjaya Food Berhad, a Malaysia-based investment company that develops and operates restaurant and cafe chains across Southeast Asia, reported last month a 38 percent slump in quarterly sales as consumers turned away from its 400 Starbucks stores. The company’s stock has fallen over 20 percent since early October.
The company’s founder, Vincent Tan, appealed to customers in Malaysia to stop the boycotts in an interview with reporters on Monday, saying it was mainly hurting Malaysians.
“I think all those who are boycotting Starbucks Malaysia should know that it is a Malaysia-owned company,” he said. “We don’t even have one foreigner working in the head office. In the stores, 80 to 85 percent of employees are Muslims. This boycott doesn’t benefit anyone.”
The website for Starbucks in Malaysia issued a blog post saying that the company had no political agenda and did not use profits to fund any government or military operations. “It is important to note that Starbucks does not have any stores in Israel,” the post added, noting that the company ended a partnership in Israel in 2003. A similar post was published on the site for Starbucks in the Middle East.
In January, Starbucks cut its global annual sales forecast as the Israel-Hamas war hurt the business of its licensees in the Middle East. The company’s chief executive, Laxman Narasimhan, said the company had suffered “a significant impact on traffic and sales in the region” because of protests and boycotts. He said that the effects could also be felt in the United States, “driven by misperceptions about our position.”
Demands from some people for the company to take a stance on the war can be seen on social media and increasingly outside Starbucks stores in the wake of the Hamas-led attack on Israel in October. In its statement at the time, Starbucks denied that the company or its former chief executive, Howard Schultz, provided financial support to Israel.
Starbucks said it would continue to grow its business in the Middle East, including working with Alshaya Group in developing plans for the region. But those plans appear to be challenged, at least for now.
