Gulf Retailer AlShaya Group to Lay Off 2,000 Amid Starbucks Boycott Challenges
A Kuwait-based retailer that operates Starbucks franchises in the Middle East and North Africa, AlShaya Group, has announced plans to lay off over 2,000 employees, accounting for approximately 4% of its workforce of nearly 50,000. These layoffs are a direct response to the ongoing difficulties faced by Starbucks due to the Israel-Hamas war and related boycotts. The job cuts, which commenced on Sunday, will primarily affect Starbucks branches in the Middle East and North Africa.
In an official statement, AlShaya Group attributed the layoffs to “continually challenging trading conditions over the last six months” without explicitly mentioning the boycotts. Starbucks has been grappling with various challenges as a result of the Gaza war, attracting both pro-Palestinian boycotts and pro-Israel boycott calls. These boycotts, along with the impact of the Gaza war and a sluggish economic recovery in China, led Starbucks to revise its annual sales forecast downwards in late January.
Starbucks clarified in 2014 that neither the company nor its former CEO Howard Schultz provide financial support to Israel. Starbucks does not have any stores in Israel or the Palestinian territories since closing its Israeli branches in 2003 due to operational challenges.
Reports indicate that US private equity firm Apollo Global Management is interested in acquiring a stake in AlShaya Group’s Starbucks franchise in the region.
The layoff announcement by AlShaya Group highlights the impact of the Israel-Hamas conflict on the Starbucks network. As Starbucks navigates these challenges, the future of its operations in the Middle East and North Africa remains uncertain.
Analyst comment
Negative news. Short: AlShaya Group will lay off 2,000 employees due to ongoing difficulties faced by Starbucks in the Middle East and North Africa amid the Israel-Hamas war and related boycotts. The future of Starbucks’ operations in the region is uncertain.
