Starbucks operator in Malaysia posts loss amid anti-Israel boycott
Pedestrians pass a Starbucks Corp. restaurant in Kuala Lumpur, Malaysia. (Photo by Samsul Said via Bloomberg)
Berjaya Food, the operator of Starbucks in Malaysia, reported a significant financial loss in the fourth quarter, citing the impact of consumer sentiment related to the boycott after Israel‘s Gaza military campaign as a primary cause.
The company, a subsidiary of Berjaya Corporation, posted a net loss of 38.2 million ringgit ($8.8 million) for the quarter ending in June, a stark contrast to the 17.28 million ringgit profit recorded during the same period last year. Sales declined by more than half, reflecting the severe downturn in consumer spending.
Impact of anti-Israel boycotts
In a financial report released Tuesday, Berjaya Food attributed the disappointing results to the “current sentiment in relation to the conflict in the Middle East.” The report highlighted that the “significantly lower revenue and pre-tax loss incurred in the current quarter under review were mainly due to” this sentiment.
The company operates 393 Starbucks outlets across Malaysia, according to its most recent annual report, which covers the period up to June 2023. Berjaya Food also manages restaurants under the Kenny Rogers Roasters brand and cafes under the Paris Baguette brand.
Boycotts affecting US fast food brands
The financial setback at Berjaya Food mirrors challenges faced by other U.S. fast-food brands in Asia, the Middle East, and parts of Europe, where calls for boycotts have intensified due to perceived links to Israel.
McDonald’s, for instance, became a focal point of boycotts after social media posts showed its outlets in Israel providing meals to soldiers following the Oct. 7 attack.
Full-year loss and additional factors
For the full fiscal year ending in June, Berjaya Food reported a net loss of 91.5 million ringgit, with a 35% drop in revenue. The company also noted a one-off loss from the sale of its entire equity interest in Jollibean Foods Pte Ltd. in November as a contributing factor to its poor financial performance.
Following the financial report, Berjaya Food’s shares dropped 13% on Wednesday, reaching their lowest level since February 2022.
