Burger King is owned by Diageo, the company formed from the merger of Guinness and Grand Metropolitan.
Its Israeli franchise decided earlier this year to open a branch in Ma'ale Adumim, a settlement in the West Bank, illegally occupied by Israel after the 1967 Middle East war.
A group of American Muslim groups, many with links to the Middle East, launched a call for the worldwide boycott until the branch closes. It said the decision was particularly insensitive given that Middle East peace talks - and the status of Israeli settlements - is in the balance.
Burger King said: "Burger King is only one of a number of global brands with a commercial presence in the West Bank."
But American Muslims for Jerusalem, (AMJ) a Washington based group said: "McDonald's has refused to open a restaurant beyond Israel's pre-1967 borders. Last year Ben and Jerry's refused to allow its Israeli subsidiary to use water from territory occupied in the 1967 conflict."
Burger King said that the decision was made by Rikamor Ltd, its Israeli franchisee, which cleared the move with the company's Miami headquarters. It added: "Burger King is sensitive to all nationalities, religions and cultures, and it is our policy to be respectful of the needs of each in providing access to our products."
Burger King has no restaurants in Palestinian-controlled areas but it has over 10,000 restaurants worldwide. There are roughly a quarter outside the US - many in the Middle East, including Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Some of the groups supporting the boycott have strong links to these countries, and the decision may well have implications for the company way beyond the US.
Ma'ale Adumim is the largest Israeli colony in the West Bank with a population of approximately 25,000.
Its strategic situation, a few miles east of occupied East Jerusalem, makes it a subject of contention for those who believe that Israel will not relinquish control of the city, claimed by Palestinians as their capital.
Massive expansion is planned for the town, which could cut off East Jerusalem from the West Bank hinterland, according to AMJ.Reuse content