‘Sale of McDonald’s Israel is an earthquake in the business world’

Restaurant industry stakeholders trying to assess what led to McDonald’s Global’s decision to acquire its operations in Israel; ‘I find it hard to believe this move aims to prevent actions like donations to IDF’

By Navit Zommer, YNET  04.08.24 | 08:40

“It’s hard for me to believe that the chain would decide to terminate its operations in Israel, it’s an event on a level that President Biden will have to address. This whole event is puzzling. Perhaps someone at McDonald’s headquarters in Illinois doesn’t understand the implications for the Israeli public,” said a senior figure in the business world following years ago.

McDonald’s Global’s decision to acquire the franchise in Israel from Omri Padan, who brought the fast food chain to the country over 30 

“This is earthquake-like. I’ve been in the international franchise business for many years, and I don’t recall a case where the chain acquired the local franchisee rather than the other way around,” he continued.

“Usually, the chain doesn’t announce ownership changes before finding an alternative franchisee. It wouldn’t surprise me if, in a few months, we find out that some investment fund from Abu Dhabi or the Emirates acquired the franchise, maybe in partnership with a British fund,” said the source.

In any case, the announcement of the deal, which will take effect in a few months, was published shortly after McDonald’s Global CEO Chris Kempczinski claimed that significant damage had been caused to the chain’s business due to the Israeli affiliate’s support for the IDF and the donation of 10,000 free meals to soldiers during the war. According to CNBC, sales of McDonald’s franchises in several Arab countries plummeted between 50% and 90% a month after the boycott, leading ultimately to the decision to acquire Padan’s activity.
Another industry insider takes the story in a different direction. “Omri Padan is 72 years old, and it may be that he got tired and it’s time for him to step down. He has always been an independent franchisee who stood by his opinions against the global chain and was not deterred by controversies,” the source said.
“He’s one of the few who succeeded in convincing the chain to adapt the menu to the Israeli palate and grill the burgers instead of frying them. He refused to open branches beyond the West Bank. Today he’s a billionaire and owns, among other things, a hotel in Mykonos and a share of one in France. Maybe he just cashed out. It’s not easy to operate a chain on such a scale. It may be that disagreements over the war prompted him to say, ‘Take it, the keys are on the table’.”
“I find it hard to believe this move aims to prevent actions like donations to the IDF. If so, the chain faces a catch-22. Refusing donations or benefits to soldiers would provoke public outrage and boycotts in Israel. I can’t see the chain wanting to inherit such a problem and maintain ownership. They’re likely to sell to a fund or an investor. There’s probably already a line of interested Israeli parties, given the franchise’s high value.”
The last time McDonald’s Israel published financial data was in 2018, during a petition by competitor Burger Ranch, reporting a turnover of NIS 900 million ($243 million) from 186 branches. Now owning 225 branches, it’s estimated that its revenue reaches NIS 1.6 billion ($432 million).

 

April 12, 2024 | 3 Comments »

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  1. McDonalds is a franchise. Internationally, their business was being hurt by their franchise in one country being pro-BDS and in another pro-Israel. They don’t want their company name to be tarnished by any kind of politics. It’s bad for business. They bought the Israeli franchise because the Israeli franchise was giving free food to IDF soldiers. They are ending this practice under the new management. So, it’s a contradictory development. On the one hand, no more free food for IDF soldiers and being demonized for it, internationally, on the other, no BDS from the very top. Hard to evaluate. But still on the other other – I have three hands – hand, I mean I can’t remotely fathom how anyone could go into battle – and I’ve read quite a bit about military strategy – without an unlimited supply of Big Macs and fries.

    I was joking but OMG, I just looked at the menu of McDonald’s Israel; it’s different in every country, you know*. I think I have to make aliya now. It’s funny nobody includes that as an important motivation in any of the statistics.

    https://en.wikipedia.org/wiki/McDonald%27s_Israel

    —-
    *It’s got a different menu in every country and within New York City, even Manhattan, they put different things on their dollar menu from branch to branch.

    Some years ago, I realized I had been overpaying when I noticed that the Egg McFuffin with sausage was on the dollar menu (2 for $5) and the Egg Mcfuffin with bacon was not ($5.95 each).

    At that time, you could ask them to take the meat out but the price was the same. It took some time for the manager to wrap his head around it too and give me a refund. And I was still a vegetarian at that time. I went back to eating meat last year after 45 years to lose weight and also, after the events of the last few years, I’m somehow less compassionate than I used to be.**

    You see, I realized that the Egg McMuffin without bacon was almost twice the price of the Egg McMuffin without sausage. How ya like them apples?

    Reminds me of the time this pianist I used to know told me – in the 80s or 90s – that he got a series of ever more threatening letters from the Gas and Electric company to pay an overdue bill of $0.00 culminating in a turnoff notice until he mailed them a check for $0.00 and received a very nice thank you note. Sounds like something out of the great Hungarian-Jewish-Israeli humorist Ephraim Kishon – who was a big deal in my family when I was a kid and one of my life-long heros and role models – if there had been AI when he was writing short stories and movies.


    ** Yes, I’m afraid I’m just a wee bit less compassionate and empathetic than I used to be. Why just the other day, I was eating a sandwich in a vest pocket park surrounded by pigeons hungry for crumbs, as usual, when this one particularly bold fellow jumped up on the table and started to walk towards me. I looked him straight in the eyes, pointed right at him, and, quoting Maimonides, who I recalled had been in a similar situation, I said,

    “Get a job!”

    I recently read a Facebook meme that popped up which said that she was going to take a cue from the dog people in the park when anyone approached her on the street and say, “Not Friendly.”

  2. The IDF aren’t the bad guys. Fuck McDonald’s. I will never eat there again. This is clearly a case of Mcdonald’s participating in the BDS movement.