Gaza war backlash costing Starbucks? Here's what we know

Starbucks on Tuesday (August 13) replaced its incumbent CEO Laxman Narasimhan with former Chipotle executive Brian Niccol amid growing scepticism over the global coffee chain's financial health due to declining sales partly attributed to a broader backlash over the company's alleged links to Israel.

As Israel's war in Gaza, which began in October last year, continueswith Washington's visible support to the Israeli side, several American multinationals, including Starbucks, have been facing consumer backlash.

Starbucks boycott and a new CEO

The controversy began with a letter, now denounced as fake by Starbucks, that claimed the company was funding the Israeli military amid the raging war in Gaza. The claim sparked outrage against Starbucks in West Asia and parts of the world sympathetic to the Palestinian cause.

The boycott gained traction with many continuing to say that Starbucks is either directly or indirectly supporting Israel.

Starbucks has denied claims of supporting Israel or any other government or military operation in West Asia.

In a statement, the coffee chain giant said they "condemned violence".

"Starbucks is a global company committed to providing a place where everyone feels welcome and a sense of belonging, anywhere in the world. Our hearts break for all affected by the violence and conflict in the Middle East. We've always condemned violence against the innocent," they wrote.

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The company again repeated that it has "never contributed to any government or military operation", but the damage was done. The brand continues to face backlash, particularly in West Asia. In response to declining sales, Starbucks' West Asia franchises had to lay off 2,000 employees in March.

Niccol will assume his new position on September 9. Until then, the Chief Financial Officer Rachel Ruggeri will serve as interim CEO.

(With inputs from agencies)