AlShaya Group, the retail giant holding the Starbucks franchise rights in West Asia, is set to lay off more than 2,000 employees as a consequence of dwindling consumer support stemming from the Gaza war-related boycotts.
Reuters cited sources familiar with the matter, who revealed that the job cuts, initiated recently, account for approximately 4 per cent of AlShaya’s extensive workforce of nearly 50,000 individuals.
The impacted positions are primarily within the Starbucks franchise operating across the West Asia and North Africa.
“The continually challenging trading conditions over the last six months have led to this sad and very difficult decision to reduce the number of colleagues in our Starbucks MENA stores,” Reuters quoted AlShaya as saying.
While AlShaya remains committed to extending support to affected employees and reiterates its dedication to the region, Starbucks expressed gratitude to departing staff members and noted its ongoing collaboration with AlShaya to foster long-term growth in the West Asia.
AlShaya, a key player in the retail landscape of the West Asia, operates various Western brand franchises besides Starbucks, including The Cheesecake Factory and Shake Shack.
The group has held the rights to Starbucks coffee shops in the region since 1999 and manages around 2,000 outlets across 13 countries in the West Asia, North Africa, and central Asia.
In recent times, AlShaya’s Starbucks business faced potential investment interest from US private equity firm Apollo Global Management Inc.
The boycotts, sparked by Israel’s military actions in Gaza, have impacted Western brands operating in the West Asia.
Starbucks, despite clarifying its apolitical stance, experienced repercussions from the unrest, affecting its market performance and prompting adjustments to its operations.
The fallout from the Gaza conflict has had reverberations not only in the West Asia but also in the United States, where Starbucks saw a decline in sales due to protests and boycott campaigns demanding the company to take a stand on the issue.
This development adds to AlShaya’s recent challenges, as the group had announced plans to scale back operations in Egypt earlier, citing the country’s economic turmoil characterised by currency devaluations and soaring inflation.
(With inputs from Reuters)
