The company explained that it was not true, but it announced that it would be fired due to losses due to the continuing boycott. Alsaya Group, a Kuwait-based franchise operator that owns Starbucks operations in the Middle East, confirmed to WSJ that it plans to lay off 2,000 employees in the Middle East as a result of difficulties in management over the past six months. Alsaya Group operates more than 1,900 Starbucks stores and employs 19,000 people in the Middle East and North Africa. Alsaya Group said in a statement, “We will provide necessary resources to employees and their families who have been affected.” Since the war between Israel and Hamas began in October last year, Starbucks has been embroiled in allegations that it has supported the Israeli government and the military and even provided funds. At the time, the Starbucks union posted an article on social networking services expressing its support for Palestine, which triggered the company’s complaint against the union for trademark infringement. Since then, Starbucks has been classified as a pro-Israel company, and a boycott has been held mainly in Arab countries. The fact that Howard Schultz, the de facto founder of Starbucks, who led the growth of the company, is Jewish has also raised suspicions. Starbucks issued a lengthy statement saying that the allegations were false, but the boycott did not abate. The Starbucks boycott also hurt sales at Starbucks stores in Malaysia, an Islamic country. Virjaya Food Berhad, a Malaysian-based investment company that develops and operates restaurant and cafe chains across Southeast Asia, reported a 38% drop in quarterly sales last month as consumers did not visit 400 Starbucks stores. The company’s stock price has fallen more than 20% since early October last year. Vincent Tan, the company’s founder, held a press conference on the 4th and appealed for an end to the boycott, saying that the boycott in Malaysia is damaging Malaysians. “Those who boycott Starbucks Malaysia should know that Starbucks is a Malaysian-owned company,” he said. “There is not a single foreign employee at the headquarters, and 80-85% of the store’s employees are Muslims, and the boycott is not helpful to anyone.” The Malaysian Starbucks website also posted a blog post saying that the company has no political intentions and does not use profits to fund government or military activities. “It’s important to remember that Starbucks doesn’t have stores in Israel,” the post said. “The company ended its partnership in Israel in 2003. A similar post was posted on the Middle East Starbucks site. In January, Starbucks lowered its global annual revenue forecast as the Israel-Hamas war hit its licensee’s businesses in the Middle East. Starbucks CEO Laxman Narasimhan said Starbucks was “severely affected by local traffic and sales” due to protests and boycotts. “The impact could also be felt in the U.S. due to misperception of our position,” he stressed. “Starbucks has said it will continue to grow its business in the Middle East, working with Al Shaya Group to develop regional plans, but it seems to be facing challenges, at least for now.”
JULIE KIM
US ASIA JOURNAL
