KFC has temporarily closed over 100 of its restaurants in Malaysia amid a persistent boycott against businesses associated with the United States. This boycott, which began in October 2023 and is motivated by pro-Palestine supporters, is a response to the ongoing conflict in Gaza.

Consumers in Malaysia are purportedly targeting American companies to express dissent against US foreign policies or perceived support for actions in the Middle East. The significant impact on KFC’s operations demonstrates how international political issues can affect global business activities.

Business slowdown amid the boycott

QSR Brands, which operates KFC in Malaysia, has temporarily closed 108 outlets nationwide. Out of which, 21 are in Kelantan and 15 are in Johor. The recent closures were first reported by the Nanyang Siang Pau Chinese-language daily.

“Many Malaysians see any American fast food operator to be related to Israel including KFC,” said Professor Mohd Nazari Ismail, chairman of the pro-Palestine advocacy group Boycott, Divestment, Sanctions (BDS) Malaysia, as reported by The Straits Times.

Local KFC stores have been distancing themselves from the conflict by emphasising in menu boards and promotional materials that the Malaysia operations are owned, in part, by Johor Corporation, the investment arm of the Johor state government.

A confidential source within QSR Brands said the company would likely ride on the wave of store closures linked to the pro-Palestine boycott to streamline operations and deal with outlets that have been struggling financially. There are reportedly over 600 KFC stores across Malaysia.

While the boycott has affected the fast-food chain in Malaysia, the temporary stoppage appears to coincide with QSR Brands’ broader objectives to improve its financial performance.

Reaction from Malaysian franchise owners 

Apart from KFC, other American brands such as Starbucks and McDonald’s have been facing backlash from consumers for their supposed support for the military operations against Gaza.

Berjaya Food, the franchise owner of Starbucks in Malaysia, suffered a 38.2% revenue decline in Q4 2023 because of the protests against the brand. Vincent Tan, founder of Berjaya pleaded with the public to stop the boycott. Such protests only hurt fellow Malaysians employed in these outlets, he believes.

Meanwhile, McDonald’s saw Q4 international sales increase by only 0.7%.

“The most pronounced impact that we’re seeing is in the Middle East and in Muslim countries like Indonesia and Malaysia,” said McDonald’s CEO Chris Kempczinski during an earnings call. “So long as this conflict, this war is going on … we’re not expecting to see any significant improvement.”

McDonald’s Malaysia, however, is hitting back with a lawsuit against BDS for purporting the fast-food operator had malicious ties to the conflict in Gaza.