Alshaya lays off Starbucks MENA employees amid Gaza crisis

Kuwait’s Alshaya Group plans to lay off workers at its Starbucks outlets after the coffee brand took a hit linked to the Gaza war. 

Calls for disengagement dealt a serious blow to Starbucks’ business since the start of the Israel-Gaza conflict, for its perceived pro-Israel stance. 

“As a result of the continually challenging trading conditions over the last six months, we have taken the sad and very difficult decision to reduce the number of colleagues in our Starbucks MENA stores,” an Alshaya Group spokesperson told Salaam Gateway.  

“We will ensure that we give our colleagues leaving the business, and their families, the support they need.”

Alshaya did not confirm the number of employees that would be released but according to a Reuters report this week, the retail giant plans to cut more than 2,000 jobs. According to earlier reports, it was in talks to sell a minority stake in the Starbucks regional business. 

Alshaya Group, headquartered in Kuwait, has been a licensed partner for Starbucks in MENA for more than 25 years. It operates over 1,300 coffee shops and employs 11,000 workers. 

“We are committed to the region, and we look forward to continuing to grow our business for many more years serving our customers,” the company said.

In January, Starbucks revised its sales forecast for 2024, expecting its full year comparable sales – both globally and in the US – to grow between 4% and 6%, from the previous range of 5% to 7% growth. 

“Beginning in mid-November, while our business continued to grow, the growth rate was impacted by three unexpected factors. First, we saw a negative impact to our business in the Middle East. Second, events in the Middle East also had an impact in the US, driven by misperceptions about our position,” said Starbucks CEO Laxman Narasimhan at the Q1 2024 Earnings Call. 

Starbucks forms part of a large group of Western brands that have suffered from consumer calls to shun them. 

Americana Restaurants International, operator of brands including KFC, Hardee’s, Pizza Hut, TGI Friday’s and Krispy Kreme, slashed almost 100 jobs in an internal restructuring, most of which were at the company’s Dubai headquarters, according to a January Bloomberg report. Its revenue fell 15% percent year-on-year in the last three months of 2023, while profit, too, was also down by nearly half. 

In a note published on LinkedIn beginning January, Chris Kempczinski, president, and chief executive officer at McDonald's Corporation, recognised that several markets in the Middle East and some outside the region were experiencing a “meaningful business impact” due to the war and associated misinformation.