Gaza boycotts batter American fast-food chains in Malaysia, Indonesia

Business Standard

3 days ago

In Malaysia and Indonesia, some of the biggest names in fast food — Starbucks, KFC, Pizza Hut, and McDonald's — are still struggling to recover from the financial hit caused by boycotts sparked by the war in Gaza, according to a report by Nikkei Asia.
Steep sales drops for US fast food chains in Malaysia
In Malaysia, Starbucks operator Berjaya Food reported an 18 per cent year-on-year revenue drop in early 2024, with net losses widening to 37.2 million ringgit (US $9 million). Its share price has fallen another 15 per cent this year. The chain has leaned on heavy localisation efforts — drinks curated by Malaysian baristas, locally designed merchandise, and menu items by a popular local chef — but store managers expect the total number of outlets to shrink from 350 to under 300 by 2026.
QSR Brands, which runs KFC and Pizza Hut, swung from a pre-tax profit of 49.6 million ringgit in 2023 to a 66.2 million ringgit loss in 2024. It has cut prices, pizzas as low as 5 ringgit, stressed its halal credentials, and hired more local staff to appeal to customers.
Turnaround for Pizza Hut, Starbucks slows expansion in Indonesia
In Indonesia, Pizza Hut operator Sarimelati Kencana posted a turnaround, recording a 15.6 billion rupiah profit in early 2025 after a loss a year earlier, thanks to new cheese-heavy menu items, digital marketing, and tighter cost control. Fast Food Indonesia, which runs KFC, reduced its losses from 384.8 billion rupiah to 138.7 billion rupiah but sold a 15 per cent stake in a poultry supplier to raise funds.
Meanwhile, Starbucks licensee Map Boga Adiperkasa has slowed expansion from 70–80 new stores annually to just 10–15, after reporting an 80 billion rupiah loss in the first half of 2025.
Boycott movement steps from Israel's war in Gaza
The ongoing boycott movement traces back to October 7, 2023, when Hamas attacked Israel, triggering a large-scale Israeli military retaliation in Gaza. The conflict, which has caused tens of thousands of deaths and a severe humanitarian crisis, has prompted widespread outrage globally.
The United States has also faced public backlash for backing Israel militarily and politically despite the scale of civilian casualties and destruction in Gaza.
Boycotts quickly spread across West Asia and Asia, targeting Western brands perceived to have ties to Israel or its supporters. According to a Time magazine report from February, McDonald's and Starbucks outlets in Jordan now stand nearly empty, while supermarkets display boycott signs over Coca-Cola and Pepsi.
In Egypt, McDonald's, Starbucks, and KFC outlets have also seen steep sales declines, with some locations nearly deserted during peak hours.
Boycott sparks violent brand backlash
In April, violent attacks on KFC outlets in Pakistan — linked to ongoing boycotts of Western brands over US support for Israel's war in Gaza — were reported by the New York Post. Police said at least 178 people were arrested in connection with a dozen incidents in Karachi, Lahore, and Islamabad, in which protesters armed with sticks and iron rods smashed windows and, in some cases, set restaurants on fire.
Some companies have attempted damage control. Time reported that McDonald's is buying back its Israeli restaurants after a deal with its franchisee, Alonyal, and that Coca-Cola franchises have issued defensive ads — but these efforts have failed to quell public anger.
Local brands step up to fill the gap
Meanwhile, local brands like Jordan's Matrix Cola and Saudi Arabia's Kinza have stepped into the gap.
In the Israeli-occupied West Bank, Chat Cola, a Palestinian-made soft drink, has surged in popularity as part of a boycott against Coca-Cola and other American brands seen as supportive of Israel during the Gaza war, the Associated Press reported earlier this year.
Another drink, Cola Gaza — a Palestinian-branded product packaged in Coke-like cans featuring Palestinian symbols — entered the UK market in 2025, joining Sweden-based Palestine Drinks, which has sold 16 million cans in five months, donating proceeds to Palestinian civil projects, Time reported.
Company representatives say the aim is less about selling soda and more about promoting the Palestinian cause and drawing attention to the humanitarian crisis in Gaza.