A Gulf retailer that operates Starbucks in the Middle East is planning layoffs as the coffee giant takes hits related to the Israel-Hamas war, according to a Tuesday report.
The Kuwait-based AlShaya Group plans to lay off more than 2,000 people, about 4% of AlShaya’s workforce of nearly 50,000, in relation to boycotts of Starbucks. The cuts began on Sunday and are concentrated in Starbucks franchises in the Middle East and North Africa, Reuters reported, citing sources familiar with the layoffs.
In a statement to media, AlShaya Group said the layoffs were the “result of the continually challenging trading conditions over the last six months” without mentioning the boycotts.
Starbucks’ stock had fallen around 1% to $91.58 a share as of 10:15 a.m. ET.
Why it matters: The report represents the latest sign of trouble for Starbucks’ business during the Gaza war. Starbucks has been the target of pro-Palestinian boycotts for its perceived support for Israel since the start of the war. The company has also been hit by pro-Israel boycott calls over a pro-Palestinian social media post by the Starbucks workers union in October at the start of the war.
In late January, Starbucks cut its annual sales forecast, citing the impact of the Gaza war as well as a slow economic recovery in China, among other factors.
Longtime former CEO Howard Schultz, who stepped down last year, is Jewish and rumored to be a supporter of Israel, though he has said little on the conflict. In 2014, Starbucks issued a statement clarifying that neither the company nor Schultz provide any financial support to the state of Israel.
“Rumors that Starbucks or Howard provides financial support to the Israeli government and/or the Israeli army are unequivocally false. Starbucks is a publicly held company and as such, is required to disclose any corporate giving each year,” said Starbucks at the time.
Starbucks does not have any locations in Israel or the Palestinian territories at present. The company closed its stores in Israel in 2003, citing “operational challenges.”
Schultz does have significant business interests in Israel. In 2021, he invested $1.7 billion in the Israeli cybersecurity startup Wiz.
Know more: The US private equity firm Apollo Global Management is reportedly interested in buying a stake in the AlShaya Group’s Starbucks franchise in the region.
