Starbucks Israel

Starbucks entered Israel through a partnership with Delek Group. At the venture's July 2001 announcement, the partnership was described as 80% Delek and 20% Starbucks; by the March 2003 closure announcement, Delek reported owning 80.5% of Shalom Coffee Company.[6][1] The operation ultimately comprised six stores in Tel Aviv and remained far below its announced plans for a nationwide network.[4][1]

The venture entered a domestic café market in which chains such as Aroma, Arcaffe, Café Joe, and Café Hillel had emerged during the preceding decade.[7] Its launch plans included large cafés, small cafés, and coffee-selling points, with an emphasis on adapting the product to Israeli tastes.[3] The later distribution of Starbucks beans and pods through supermarkets was a separate retail model rather than a revival of the café chain.[5] A 2025 account continued to describe Starbucks as having had no operations in Israel since 2003.[8]

In July 2001, Delek Fuel Corporation chief executive Giora Sarig announced that the first Israeli Starbucks branch would open at Rabin Square in Tel Aviv in September, followed four days later by a second branch on Rothschild Boulevard.[6] The expansion program envisaged five branches in central Israel by the end of 2001, 20 nationwide by the end of 2002, and 80–100 within five years, with a total investment of $20 million.[6]

The operation launched in September 2001.[3] Israel's opening appeared in a Starbucks corporate chronology alongside the company's 2001 expansion into Austria and Switzerland.[9] Within Israeli coffee culture, the arrival formed part of a specialty-coffee movement that reached the country a decade or two after its emergence in the United States.[7]

The launch plans included large cafés, small cafés, and coffee-selling points.[3] Sarig emphasized that the venture was a branded retail investment and was not being tied to Delek's gas stations.[6]

Expansion remained far below the announced ambitions. By February 2003, only six branches had opened, and losses had exceeded the business plan's expectations.[4] A planned Jerusalem branch was abandoned following terrorist attacks, and layoffs were underway by the time of the February report.[4]

On March 31, 2003, Starbucks Coffee International and Delek announced their agreement to terminate the Israeli joint venture, citing “on-going operational challenges in the market.”[1] The operating agreement was to end on April 4, with the six Tel Aviv stores closing.[1] Starbucks executive Mark McKeon described the decision as difficult and mutual after months of discussions and market reviews, while expressing hope that the company could return at an appropriate time.[1]

Delek's board approved the closure after attempts to sell the operation to local investors or Starbucks had failed.[10] About 130 employees were to receive dismissal letters.[10] Delek's investment write-down was approximately NIS 17 million, including a further NIS 7 million write-down in the fourth quarter; the chain had lost more than NIS 10 million in the preceding year, including one-time provisions.[10]

At the launch announcement, Starbucks Europe, Middle East, and Africa president Mark McKeon said the chain would offer 50 coffee types and 14 distinctive mixtures.[6] Sarig said products could be adapted to Israeli preferences, including a stronger double latte.[6] Adapting the coffee to local tastes also featured prominently in the launch strategy described by a later retrospective.[3]

Starbucks entered a market where several Israeli café chains were already established.[7] A 2013 retrospective quoted restaurateurs who criticized the venture's product mix, sandwich quality, café locations, and coffee, while also noting that the local café sector continued to grow after Starbucks withdrew.[3]

A February 2003 report relayed a somewhat different assessment from Delek sources. They regarded location selection as a major weakness and suggested that smaller branches in outlying areas might have worked better.[4] They also judged the coffee produced under Starbucks' standards too weak for Israeli tastes.[4]

Security conditions during the Second Intifada further complicated the venture, particularly its intended expansion into Jerusalem.[3] The planned Jerusalem opening was delayed following terrorist attacks, but contemporary assessments also identified the product mix, locations, management, and coffee as difficulties rather than treating security as the sole explanation.[3]

By April 2021, Starbucks products, including beans and pods, had begun appearing in Israeli supermarkets through a partnership with Nestlé.[5] This retail distribution did not constitute the reopening of a Starbucks café chain in Israel.[5]

A promotional pop-up at Tel Aviv's Dizengoff Center ran from April 25 to May 15, offering samples and discounts for products purchased in stores.[5] The pop-up itself did not sell products.[5] There were no Starbucks locations in Israel as of October 7, 2024, and a 2025 account likewise described the company's Israeli operation as having ended in 2003.[11][8]

The Israeli venture contrasted ambitious expansion plans with a brief operation that stopped at six stores. The partners had announced a target of 80–100 branches within five years, but the chain closed less than two years after its launch.[6][1] Contemporary assessments identified several overlapping difficulties rather than a single established cause.[3][4]

The later supermarket distribution of Starbucks beans and pods demonstrated a different method of maintaining the brand's commercial availability in Israel without rebuilding the café network.[5]

Political explanations for the Israeli withdrawal circulated alongside its documented business difficulties. An April 2003 ADL entry described the closure as a business decision unrelated to anti-Israel pressure.[12] In 2014, Starbucks spokesperson Jim Olson said the stores had closed because of operational challenges and that the decision “was not related to political issues.”[13]

Starbucks also rejected claims that it or Howard Schultz financially supported the Israeli government or military. Its 2014 statement described the company as non-political and said that neither Starbucks nor Schultz provided such financial support.[13]

Starbucks later became a target of boycott activism despite its lack of Israeli cafés. Commentary on the 2008–09 Gaza campaign reported boycott calls in Europe and the Middle East and stated that Starbucks had acknowledged an effect on its business.[14] During the year after October 7, 2023, the ADL described Starbucks as a new, unofficial target of intensified BDS-activist calls based on perceived support for Israel.[15] Starbucks stores outside Israel were also vandalized with anti-Israel graffiti and boycott messages.[11]

Following the October 2023 Hamas attack on Israel, Starbucks Workers United expressed solidarity with Palestinians in a social-media post that was later deleted, and Starbucks responded with a trademark lawsuit while reaffirming its political neutrality.[8] In March 2024, The Jerusalem Post reported planned cuts of more than 2,000 jobs at Kuwait-based franchisee Alshaya Group—about 4% of its total workforce and concentrated mainly in its Middle East and North Africa Starbucks operations—amid boycott-linked trading difficulties.[16]