AlShaya Group, the retail behemoth holding the franchise rights for Starbucks in Western Asia, is poised to terminate over 2,000 employees due to declining consumer support resulting from boycotts linked to the Gaza conflict.
Sources familiar with the situation, cited by Reuters, disclosed that the job cuts, recently initiated, constitute approximately 4 percent of AlShaya’s extensive workforce, which comprises nearly 50,000 individuals.
The impacted positions predominantly belong to the Starbucks franchise operating across Western Asia and North Africa.
“Continuously challenging trading conditions over the last six months have led to this unfortunate and very challenging decision to reduce the number of colleagues in our Starbucks MENA stores,” Reuters quoted AlShaya as stating.
While AlShaya affirms its commitment to providing support to affected employees and reiterates its dedication to the region, Starbucks expressed appreciation to departing staff members and acknowledged its ongoing partnership with AlShaya to foster long-term growth in Western Asia.
AlShaya, a significant player in Western Asia’s retail arena, manages various Western brand franchises besides Starbucks, including The Cheesecake Factory and Shake Shack.
Since 1999, the group has held the rights to Starbucks coffee shops in the region and oversees around 2,000 outlets across 13 countries in Western Asia, North Africa, and central Asia.
Recently, AlShaya’s Starbucks business attracted potential investment interest from US private equity firm Apollo Global Management Inc.
Boycotts stemming from Israel’s military actions in Gaza have impacted Western brands operating in Western Asia.
Despite clarifying its apolitical stance, Starbucks faced repercussions from the unrest, affecting its market performance and prompting operational adjustments.
The repercussions of the Gaza conflict have had ripple effects not only in Western Asia but also in the United States, where Starbucks witnessed a sales decline due to protests and boycott campaigns urging the company to take a stance on the issue.
This development compounds AlShaya’s recent challenges, as the group had announced intentions to downsize operations in Egypt previously, citing the country’s economic upheaval characterized by currency devaluations and soaring inflation.
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