McDonald’s and Starbucks: Has a Boycott on Their Stock Prices Damaged the Brands?

There have been recent boycotts against international brands like McDonald’s and Starbucks due to various geopolitical issues. The issue of the Palestine conflict has brought a new wave of seasonal boycotts against McDonald’s and Starbucks. We pick these two brands as they are making a lot of waves in Malaysia’s social media.

McDonald’s faced controversy in the Middle East due to the Israel-Hamas conflict. An Israel-based franchise announced free food for members of the Israeli military, which led to a consumer backlash and distancing messages from other franchises. However, McDonald’s Malaysia has clarified that it does not contribute, support or be involved in any political or religious conflicts in any country.

Starbucks in Israel?

Starbucks also faced controversy tied to the Israel-Hamas war. Starbucks Workers United, a union, posted a message expressing solidarity with Palestinians, which triggered calls to boycott Starbucks. However, Starbucks confirmed that it does not support Israel and does not have any stores in Israel.

Ahead of the Hamas attacks in Israel, McDonald’s Corp was facing a challenging week as its stock hit a one-year low, with concerns mounting that rising interest rates could impact consumer spending. The stock fell by 1.4% during afternoon trading on Oct 6, marking its lowest point since October 17, 2022.

During the week it recorded a 5.6% decline, making it the weakest performer among Dow Jones Industrial Average components, and it was on course for a sixth consecutive week of losses. The market’s apprehension stems from stronger-than-expected September job data, with worries that a robust job market could lead the Federal Reserve to continue raising interest rates, potentially affecting consumer spending.

Challenging day for stock markets

On Friday, Starbucks Corp. saw its shares decline by 0.70% to $92.02 in a challenging day for the stock market. The S&P 500 Index fell by 0.48% to 4,117.37, and the Dow Jones Industrial Average dropped by 1.12% to 32,417.59. This marked the third consecutive day of losses for Starbucks.

It’s worth noting that Starbucks closed $23.46 below its 52-week high, which it had reached on May 1st. In comparison to some of its competitors on Friday, Starbucks had a mixed performance. Coca-Cola Co. fell by 0.97% to $55.24, PepsiCo Inc. dropped 1.11% to $159.62, and McDonald’s Corp. saw a minimal decline of 0.03% to $255.76.

The trading volume for Starbucks was 7.9 million, surpassing its 50-day average volume of 5.5 million.

In response to Russia’s invasion of Ukraine, many multinational companies including McDonald’s and Starbucks have stopped their operations in Russia. McDonald’s temporarily closed all 850 restaurants in Russia and 108 restaurants in Ukraine. Starbucks suspended all business operations in Russia⁵.

Looks like boycotting or not, business is as usual for both McDonald’s and Starbucks.