Customers are boycotting Pizza Hut after it was revealed that the restaurant business fed soldiers on Israeli military installations for free. Pizza Hut Israel implied that the brand had given the soldiers free lunches when it published an Instagram story from user @alex_shults on January 19. The narrative showed two happy soldiers holding piles of Pizza Hut pizza boxes. After 24 hours, the story was no longer visible on Instagram.
Supporters of Palestinian rights boycotted the chain’s products after Palestinian news outlets, such as the Quds News Network, started reposting screenshots of the posts on Instagram and X, the website that was once known as Twitter. Advocacy groups have also pushed for boycotts of other companies that are thought to favor Israel in recent months. For example, Starbucks faced protests and boycotts from union members when the corporation sued over social media messages that supported the Palestinian people that were uploaded to a union account. Pizza Hut has neither confirmed that the pizzas were given to the military for free nor officially addressed the boycotts.
History of Pizza Hut in Israel
Pizza Hut Israel, a local franchisee, runs many of the brand’s locations around the nation. The business may accommodate regional preferences while preserving its worldwide brand identity due to this franchising model. The Israeli fast-food market recognizes Pizza Hut as one of its prominent brands through its widespread locations, while adjusting its menu offerings to suit local preferences.
In May 2017, Pizza Hut drew public condemnation after its Israeli restaurant posted an online advertisement. The advertisement took an ironic approach to Palestinian prisoners who were striking by refusing food. A representation of a prisoner eating Pizza Hut pizza within his jail cell received digital manipulations for promotional purposes. Social media users, along with BDS movement members, began using the hashtag #boycott_pizzahut following the publication of the advertisement.
The promotion company responsible for creating the advertisement received dismissal from Pizza Hut while the restaurant chain conducted its apology and removed the video from circulation.
Political stance of Pizza Hut in supporting Israel
Positive support for Israel stands as the main reason Pizza Hut faces both intense criticism and active boycotts. This stems from accusations that the company supplied free pizza to Israeli military troops. Images of Israeli Defense Forces (IDF) soldiers holding Pizza Hut boxes provoked anger from pro-Palestinian activists since they accused the fast food company of supplying free pizza to combat troops serving in Gaza during the crisis.
Online sharing of the 136,000 hashtagged #BoycottPizzaHut posts led to an increasing uproar among protesters. Several commentators believe Pizza Hut takes part in Palestinian apartheid and genocide through its provision of pizza to Israeli fighters.
The Yum Brands parent organization has neither verified the delivery details of pizza to Israeli military bases nor issued a detailed public statement about this situation. Grassroots activists alongside BDS movement members have selected Pizza Hut as a target for boycott activities because its Israeli franchise operations received support from activists who view these activities as aiding the Israeli military.
What impact has the boycott had on Pizza Hut’s sales?
Since its Israeli franchise provided support to Israeli soldiers, Pizza Hut experienced a massive sales decline and decreased profitability, particularly in the Middle East plus other associated territories.
- During the nine months of 2024, the largest Pizza Hut franchisee in the Middle East (Americana Restaurants, with its KFC and other brands) suffered a 15.3% decline in revenue, which dropped to $1.61 billion and saw profits decrease by 48.2% to $117.4 million. These downturns emerged from sustained boycotts in the Israel-Gaza conflict combined with negative perceptions among customers regarding American as well as Israeli targeted brands.
- Pizza Hut franchisee Americana Restaurants has failed to sustain customer interest after implementing special discounts because the boycott continues, reducing store visits and product sales throughout the targeted markets. Only a portion of the losses have been offset by these promotions.
- The boycott had a severe impact in Turkey, causing IS Gida, the local operator that operated the KFC and Pizza Hut franchises, to go bankrupt. Yum! The franchise agreement was terminated by Brands, which led to the closure of 537 outlets and pushed the local operation into debt beyond $214 million.
- The earnings reports of Americana Group indicated KFC and Pizza Hut, together with other brands, experienced a -10% decline in quarterly sales metrics during 2023.
- Besides the Middle East, the boycott has zeroed in on sales in Malaysia and Indonesia because of active consumer opposition to firms suspected of backing Israel.
- Even if average daily transactions in Q3 2024 slightly improved over Q2, the total financial impact is still enormous, with profits still being far lower than they were before the boycott.
What measures has Pizza Hut taken to mitigate the financial losses?
Pizza Hut has implemented several strategies to lessen financial losses in the face of obstacles such as franchise bankruptcy, boycotts, and shifting market conditions:
- In 2024, Pizza Hut abruptly closed 15 of its failing sites in the Midwest of the United States, and there are indications that more would follow. The goal of this downsizing is to reduce expenses and concentrate on more lucrative sources
- To stabilize its finances, Pizza Hut Restaurants operator Heart with Smart in the UK completed a major debt and equity restructuring. According to reports, the group is nearing a rescue agreement with Directional Capital, which might assist in obtaining more cash and preventing extensive closures or job losses
- To minimize costs, Pizza Hut had previously suggested a Company Voluntary Agreement (CVA) that called for closing 29 locations and laying off 450 employees
- Delivery and takeaway options have replaced the labor-intensive and less lucrative traditional dine-in strategy at many Pizza Hut locations. This change lowers labor expenses and reflects convenience-driven consumer habits
- To reduce employment expenses, the company has scaled back or shut down its dining room operations in numerous locations, concentrating its resources on delivery and carryout services
- To remain competitive and improve the consumer experience, Pizza Hut has made investments in digital transformation, including upgrades to its apps and online ordering system. Through more effective ordering channels and marketing, these improvements aid in increasing sales
- Although these tactics have garnered some criticism, reports suggest Pizza Hut may be lowering operating expenses by utilizing older dough and spending less on advertising
- There have been layoffs, most notably in California, where two franchisees let go of 1,200 delivery workers, probably in an effort to save money in the face of growing wage constraints.
- Pizza Hut has strengthened cybersecurity procedures to safeguard customer data and rebuild trust following a major data breach that affected Australian consumers. This is essential for preserving customer loyalty and sales.
Conclusion
The international pizza chain exists in Israel through franchises, but this business model has sparked significant political discussions that involve accusations of biased political positions. The Israeli franchise of Pizza Hut faces criticism from all sides since it provides free pizza to Israeli soldiers and runs promotional campaigns that Palestinians consider offensive and inappropriate. Pizza Hut International has not made public statements backing Israeli military operations, but such actions have triggered a sharp public backlash through social media boycotts and criticism.
