KFC Turkey Shuts All 537 Outlets Amid Bankruptcy and Gaza Boycott Fallout

İş Gıda A.Ş., the Turkish operator of KFC and Pizza Hut franchises, has filed for bankruptcy, resulting in the immediate closure of all 537 restaurants across Turkey and leaving 7,000 employees jobless. The company cited $214 million (7.7 billion Turkish lira) in debt and blamed the abrupt termination of its franchise agreement with U.S.-based Yum! Brands for the collapse.

KFC and Pizza Hut Outlets in Turkey Close After Franchise Operator Declares Bankruptcy

Key Developments:

• Bankruptcy Filing: İş Gıda declared bankruptcy on February 7, 2025, with debts exceeding $214 million (₺7.7 billion). The company’s assets, including factories, were seized by banks.
• Aggressive Expansion Backfires: The company rapidly expanded from 138 KFC and 58 Pizza Hut locations in 2020 to 537 outlets by 2024, relying heavily on debt. Rising interest rates and liquidity issues compounded its financial strain.
• Unpaid Wages and Layoffs: Employees protested unpaid January salaries, which İş Gıda pledged to clear by February’s end. Layoffs are underway under Turkey’s Labor Law, with severance and leave payments legally protected.
• Boycott Impact: Reports indicate a 40% drop in KFC sales in Turkey, linked to consumer boycotts of Western brands perceived to have ties to Israel amid the Gaza conflict 17.

Gaza Boycott and Financial Mismanagement Fuel Crisis

The fallout highlights how geopolitical tensions and financial risks can destabilize global franchises. Reports suggest consumer boycotts targeting Western brands over Israel’s actions in Gaza significantly impacted KFC’s Turkish sales . Meanwhile, İş Gıda’s debt-fueled growth strategy left it vulnerable to economic shocks, including Turkey’s inflation crisis .

• Supply Chain Disruptions: Poultry suppliers reported reduced orders months before the collapse.
• Consumer Distrust: Social media campaigns urging support for local brands over “pro-Israel” franchises gained traction in late 2024

Employee Allegations of Mismanagement:

Workers accused İş Gıda of diverting funds to subsidiaries like Krispy Kreme and a rim factory in Germany during the financial crunch. They also claimed executives purchased a $50 million mansion using unpaid employee premiums .

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Yum! Brands stated it aims to reopen outlets with new franchise partners, though rebuilding consumer trust may prove challenging. The closure marks one of Turkey’s largest corporate failures, underscoring the risks of rapid expansion in volatile markets .

Employee Protests and Unpaid Wages

• 7,000 Layoffs: All employees were terminated under Article 18 of Turkey’s Labor Law, with severance and notice pay legally reserved.
• Unpaid Salaries: Workers protested outside İş Gıda’s Istanbul headquarters after January wages were delayed—a first in the company’s history. The firm pledged to clear dues by February’s end.
• Allegations of Misconduct: Employees accused management of diverting funds, including claims of a ₺50 million mansion purchase and investments in Krispy Kreme outlets during financial turmoil.

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By Munsif News | Updated: February 19, 2025

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