Starbucks Israel
Starbucks' operations in Israel, now closed
Last updated August 31, 2026
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Overview
Starbucks Israel was a licensed operation of Starbucks in Israel, briefly operated, then closed due to business adjustments.
History
Starbucks Israel was created in 2001 as an international-local partnership rather than as a wholly owned Starbucks network. Starbucks Coffee International, the international arm of Starbucks Coffee Company, joined with Delek Group of Israel to establish Shalom Coffee Company. The reported ownership structure gave Delek 80.5 percent and Starbucks 19.5 percent, although Starbucks held an option to raise its stake to 50 percent. Delek also paid for the franchise rights and owed Starbucks a percentage of sales under the reported commercial arrangement. The venture’s launch strategy focused on Tel Aviv. A first store was planned for Rabin Square, and the partners reportedly hoped to establish about 20 locations during the first year. The plan reflected Starbucks’ broader international expansion during the period, when the company was taking its café model into new markets through a mixture of company-operated stores, licensing and local partnerships. Starbucks Israel ultimately reached six stores, all in Tel Aviv, and employed approximately 120 people. The partners considered opening in Jerusalem but did not proceed, with security concerns cited in accounts of the venture. The Israeli operation faced several obstacles. The country already had a competitive and culturally established café sector, with independent coffeehouses and domestic chains familiar with local tastes and consumption habits. Starbucks also entered during the Second Intifada, when security concerns affected mobility, retail activity and business confidence. Accounts of the closure additionally point to an unattractive product mix or insufficient adaptation to local preferences. These factors limited customer demand and made the planned rapid expansion impractical. By 2002, Delek was reportedly attempting to find another investor or purchaser for its majority stake. The effort came after a significant decline in sales and continuing losses. Accounts of the Israeli subsidiary cite losses of approximately seven million shekels in 2002. Starbucks and Delek subsequently decided to end the partnership. Starbucks announced on March 31, 2003 that the Israeli outlets would close, and the operation ceased during 2003. The withdrawal generated public discussion beyond the business results. Some customers and commentators believed that the closure was linked to the worsening Israeli-Palestinian conflict or to alleged political preferences attributed to Starbucks. Contemporary reporting and reference material describe those claims as rumors or customer reactions rather than as an established explanation. Starbucks’ stated explanation was commercial: the venture had suffered financial losses and did not produce an acceptable operating result. The brand was not entirely absent from Israel after the café chain closed. In September 2005, Starbucks reportedly hired MAN Properties Real Estate Consultants to investigate a possible return and identify a local managing partner. That exploration did not lead to a documented revival of the former six-store café network. Separately, Starbucks-branded packaged coffee and compatible capsules have been marketed in Israel through local consumer-goods distribution, including products promoted by Nestlé Israel. Those packaged-goods arrangements should not be confused with the defunct Starbucks Israel café company.
- 2005
Potential re-entry is explored
[1]Starbucks investigates possible Israeli partners and market-entry options, but no confirmed retail relaunch follows in the cited material.
- 2003
Israeli stores close
[1]Starbucks announces the dissolution of the joint venture and ends the Israeli café operation after approximately two years.
- 2002
Ownership and performance difficulties emerge
[1]Sales weaken, reported losses accumulate and Delek seeks a possible buyer or additional investor for its stake.
- 2001
Shalom Coffee Company is formed
[1]Starbucks Coffee International and Delek Group establish the Israeli Starbucks venture, with Delek as majority owner and Starbucks as minority partner.
- 2001
Israeli café rollout begins
[1]The venture opens Starbucks locations in Tel Aviv and begins pursuing a broader national expansion plan.
Products and positioning
An international coffeehouse concept adapted through a local Israeli joint venture; the retail operation sought to combine Starbucks coffee and service standards with a local store network.
Café beverages · 2001
Starbucks coffee beverages
The former Israeli stores primarily sold Starbucks coffee drinks, including brewed coffee and espresso-based beverages. The local venture’s core proposition was the Starbucks café experience delivered through Tel Aviv locations. Available reference material does not provide a complete store menu, so individual beverage availability in Israel should not be assumed beyond the general coffee offering.
Packaged coffee
Starbucks packaged coffee capsules
Starbucks-branded coffee capsules have been marketed to Israeli consumers through local packaged-goods distribution. Referenced products include capsules compatible with Nespresso-style systems and offerings organized around light, medium and dark roast profiles. These products represent an at-home distribution channel and are separate from the former Starbucks Israel café chain.
Tea and food · 2001
Starbucks tea and café food
Starbucks’ broader international format includes tea, pastries and light café food alongside coffee. The available sources identify coffee as the principal product of Starbucks Israel but do not document a definitive Israeli menu for these categories. They are therefore included as part of the format rather than as verified local flagship products.
Controversies
2003
Political-rumor controversy surrounding the closure
After Starbucks Israel closed, some customers and commentators alleged that the withdrawal was politically motivated and connected with the Israeli-Palestinian conflict. Reference material describes this as a public controversy or rumor; Starbucks attributed the decision to the venture’s financial losses. The available sources do not establish the political allegation as fact.
Brand decisions
2005
Assess a possible Israeli re-entryStrategyBackground
Starbucks considered whether a different local-partner structure could support a return after the failure of the first venture.
Action taken
The company hired MAN Properties Real Estate Consultants to explore options and identify a managing partner.
Aftermath
The cited material does not document a subsequent Starbucks café relaunch in Israel.
2003
Withdraw from the Israeli café marketStrategyBackground
Weak sales, reported losses, security concerns and a highly competitive local café market undermined the original expansion plan.
Action taken
Starbucks announced the closure of its Israeli stores and dissolution of the joint venture.
Aftermath
The six-store network ceased operations in 2003. Later re-entry options were examined but no confirmed revival of the former chain is documented in the supplied sources.
2001
Enter Israel through a local joint ventureStrategyBackground
Starbucks sought to establish a presence in Israel while using a local partner with market and operating capabilities.
Action taken
Starbucks Coffee International partnered with Delek Group to form Shalom Coffee Company, with Delek holding the majority interest and Starbucks retaining a minority stake and reported option to increase ownership.
Aftermath
The partnership opened six Tel Aviv stores but did not achieve the planned national scale and was dissolved in 2003.
Reported 2002 loss of the Israeli venture. Approximately ILS 7 million loss (2002)
Sources4 sources
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