Gulf-based retail giant AlShaya Group, the owner of Starbucks franchise rights in the Middle East, is set to lay off more than 2,000 employees due to business downturns linked to consumer boycotts associated with the Gaza war. Sources familiar with the matter revealed that the layoffs, initiated on Sunday, account for roughly 4% of AlShaya’s extensive workforce of nearly 50,000 individuals, primarily impacting its Starbucks operations across the Middle East and North Africa.
The ongoing boycotts, stemming from the Gaza conflict, have posed formidable challenges for AlShaya’s operations, leading to adverse trading conditions, as disclosed by insiders. In a statement addressing the issue, AlShaya expressed regret over the necessity of the job cuts, citing persistently challenging trading circumstances over the past six months.
“We will ensure that we give our colleagues leaving the business, and their families, the support they need,” the company pledged, reaffirming its commitment to the region.
Established in 1890 in Kuwait, AlShaya stands as one of the largest retail franchisees in the region, boasting rights to operate prominent Western brands such as The Cheesecake Factory and Shake Shack. Since 1999, it has held the rights to Starbucks coffee shops across the Middle East, running approximately 2,000 outlets in 13 countries spanning the Middle East, North Africa, and central Asia.
Reports suggest that US private equity firm Apollo Global Management Inc has been engaged in discussions to acquire a stake in AlShaya’s Starbucks business, indicating potential shifts in the company’s ownership structure.
The boycotts, largely stemming from grassroots movements, emerged in response to Israel’s military actions in the Gaza Strip following a deadly attack by Hamas in southern Israel on October 7. Starbucks, a non-political organization, emphasized its stance in October, refuting rumors of support for the Israeli government or military.
However, the fallout from the conflict has taken its toll on Starbucks’ operations, with the company reporting significant sales impacts during its first-quarter results, particularly in the Middle East and the US. Consumer protests and boycott campaigns urging Starbucks to take a stance on the issue have contributed to the challenges faced by the brand in the region.
Moreover, AlShaya’s woes extend beyond the boycott fallout. In January, the company announced plans to scale back operations in Egypt due to the country’s economic woes, including currency devaluations and record inflation, though specific details regarding store closures remain undisclosed.