MENA – Alshaya Group, the retail operator of Starbucks in the Middle East and North Africa (MENA), has paused its plans to sell a 30 percent minority stake in the Starbucks franchise, according to a report by Reuters.
The decision comes in the wake of sustained customer boycotts across the region, driven by protests and misconceptions about Starbucks’ stance on the Gaza conflict.
Starbucks, a US-based coffee chain, has been facing significant consumer backlash in several MENA countries, where the brand operates over 1,900 outlets through the Alshaya Group.
In response to the negative sentiment, Starbucks introduced a new section on its website titled Starbucks for the Record in December 2023, aimed at clarifying its position and countering misinformation.
Despite these efforts, the boycotts have had a notable impact on sales and customer traffic.
Laxman Narasimhan, Starbucks’ CEO, acknowledged a “significant impact on traffic and sales” in the region, noting that the effects were felt not only in MENA but also in the US, influenced by the misperceptions surrounding the company’s position on the conflict.
As a result, Starbucks adjusted its annual sales forecast in January 2024 to account for the financial repercussions of the protests.
In addition to consumer boycotts, Starbucks and Alshaya Group have faced declining revenues across the region. Licence partners such as Berjaya Food and Alsea have cited protests as a key factor behind the downturn.
To address the humanitarian concerns raised, Starbucks partnered with the Alshaya Group in April 2024 to donate US$3 million to World Central Kitchen, providing one million meals to families in Gaza.
The Alshaya Group, which has been operating since 1890, manages Starbucks franchises in 11 countries across the region, including Saudi Arabia, Egypt, Kuwait, and the UAE.
The group also holds licences for a variety of global food and beverage brands such as Chipotle, Dean & Deluca, Le Pain Quotidien, and Pizza Express.
Earlier in March 2024, Alshaya Group announced plans to lay off 2,000 employees, primarily from its Starbucks outlets across the MENA region. The job cuts were initiated in response to the ongoing financial strain caused by the boycotts and declining sales.
Starbucks North America CEO resigns
The announcement follows recent leadership changes at Starbucks, with Michael Conway, CEO of Starbucks North America, stepping down from his position after just six months.
He will remain with the company until November 30 to assist with the leadership transition, concluding his 11-year tenure at Starbucks.
Following the resignation, Starbucks announced that Sara Trilling, the company’s North American president, will oversee retail operations across the region.
Trilling has been with Starbucks for 22 years and previously managed 3,500 stores as senior vice president of its north division.
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