Starbucks Exits Israel

April 2, 2003

All six Starbucks cafes in Israel will be shut down at the end of the week, Starbucks Coffee International and the Delek Group said as they announced the end of their brief partnership. All 120 of the coffee chain's employees in Israel will be laid off.

According to Israel's Haaretz.com, poor sales and Delek's failure to find an investor to bail it out of a losing venture caused the decision to shut down the expensive coffeehouses. Starbucks Corp., the parent of Starbucks Coffee International, told Haaretz that its decision to dissolve the joint venture was driven by "market challenges," an allusion, the newspaper said, to "Israel's severe recession and security problems."

"It was a very difficult decision," Mark McKeon, president of Starbucks Coffee International for Europe, Middle East and Africa told Haaretz. "Following months of serious discussions and market reviews with the Delek Group, we came to this amicable and mutual decision. Our commitment in the market continues to be strong and long-term, and we will return at an appropriate time."

Starbucks and Delek opened their first Israeli coffee shop in late 2001 with plans to reach 20 outlets nationwide by the end of 2002, but wound up opening only six outlets, all in the Tel Aviv area.

Please note that this does not mean an end to the boycott of Starbuck. For further information please visit the Boycott Starbucks page.