AlShaya, Starbucks Franchisee in Middle East, Plans Job Cuts Due to Gaza War-Related Boycotts
According to sources familiar with the matter, AlShaya Group, the Gulf retail powerhouse that holds the rights to operate Starbucks in the Middle East, is reportedly considering laying off more than 2,000 employees due to the impact of consumer boycotts related to the Gaza conflict.
According to anonymous sources, the recent workforce reductions at AlShaya, which commenced on Sunday, involve approximately four percent of its nearly 50,000 employees. The majority of the cutbacks are reportedly occurring within the Starbucks franchise operations in the Middle East and North Africa. The sources chose not to disclose their identities as this information has not been made public yet.
According to one source, the boycotts have created challenging trading circumstances for the company.
“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,” AlShaya said in a statement, without confirming the number of job losses.
AlShaya said it would support colleagues leaving the business and that it remained committed to the region.
“Our thoughts are with the green apron partners who will be leaving, and we want to thank them for their contributions,” a Starbucks spokesperson told Reuters.
“Starbucks remains committed to working closely with AlShaya to drive long-term growth in this important region.”
Neither AlShaya Group, nor the sources, said how many staff the group employed at its Starbucks operations.
Established in 1890 in Kuwait, AlShaya is one of the biggest retail franchisees in the region with rights to operate businesses of popular Western brands including The Cheesecake Factory and Shake Shack.
It has owned rights to operate Starbucks coffee shops in the Middle East since 1999. The Starbucks unit runs around 2,000 outlets in 13 countries, across the Middle East and North Africa, and central Asia.
US private equity firm Apollo Global Management Inc , has been in talks to buy a stake in AlShaya’s Starbucks business, three sources close to the matter told Reuters last month.
Western brands have been hit by a largely spontaneous, grassroots boycott campaign over Israel’s war on the Gaza Strip.
In the wake of the boycotts, Starbucks in October said it was a non-political organisation and dismissed rumours it had provided support to the Israeli government or army.
Starbucks said in January that the Gaza war had hurt its business in the region as it missed market expectations for first-quarter results.
It said sales were significantly impacted due to the war, in the Middle East and in the United States, as some consumers launched protests and boycott campaigns asking the company to take a stance on the issue.
In January, AlShaya said it was scaling back operations in Egypt due to the country’s ongoing economic troubles including multiple currency devaluations and record inflation. It did not comment on which stores it would close or when they would shut.
(Reuters)
