KFC Israeli Franchisee With Russian Owners Seeks Bankruptcy Protection
Translated & summarized from NEWSru Israel by baba
Smart-Service D&K, the Israeli operator of KFC restaurants, has filed for bankruptcy in Beersheba, citing debts of 50 million shekels. The company owes 37 million shekels to its Russian owners, who are unable to provide funds due to sanctions. The war and economic downturn have severely impacted profitability, leading to increased losses and unpaid rent. The company plans to dismiss employees as part of a two-month operational strategy.
The story in 6 lines · by baba
- KFC Israeli franchisee Smart-Service D&K filed for bankruptcy with 50 million shekels in debt.
- Owners Konstantin Kotov and Andrey Oskolkov are unable to fund the company due to Russian sanctions.
- The war in Israel significantly reduced profitability and customer traffic for the restaurants.
- The company owes 37 million shekels to its owners and millions more to employees and creditors.
- Landlords have begun legal action over unpaid rent, with some leases facing termination.
- Smart-Service D&K plans to dismiss employees as part of a short-term operational strategy.
Smart-Service D&K, the Israeli operator of KFC restaurants, has filed for bankruptcy with the Beersheba District Court, requesting the appointment of a temporary manager. The company, which operates 12 branches, reported debts totaling 50 million shekels. A significant portion of this debt, 37 million shekels, is owed to its owners, Konstantin Kotov and Andrey Oskolkov, who are reportedly in Russia and unable to inject further capital due to sanctions.
Founded in 2020 as a franchisee for the American chain in Israel's Jewish sector, Smart-Service D&K faced challenges exacerbated by the war. The company stated that profitability plummeted due to a decline in customers, a hit to tourism, and reduced consumption. Increased expenses from opening new branches, coupled with ongoing costs during periods of closure due to conflict with Iran, further strained finances. Marketing activities have been largely halted since 2023.
Financial reports indicate that while the company's turnover grew 12% to 71 million shekels in 2024, its losses widened to 9.4 million shekels, following losses of 2.5 million and 1.8 million shekels in the preceding two years. The company's assets are valued at only 3.3 million shekels, with half of that amount being deposits held by landlords.
Kotov and Oskolkov previously acquired KFC's Russian business from Yum! Brands in 2023, rebranding the restaurants as Rostic's. Oskolkov also served as Deputy Chairman of the Udmurtian government and owns the "Komos Group" agroholding. Sanctions have hindered their ability to transfer funds from Russia to Israel, and attempts to find a strategic investor or buyer have so far been unsuccessful.
Landlords of six restaurant locations have begun legal action, including lease termination, as the company has not paid rent for the past two months. In addition to the debt to its owners, Smart-Service D&K owes 1.9 million shekels to employees in severance pay, 1.2 million shekels to tax authorities and municipalities, and 9.5 million shekels to other creditors. A two-month operational plan submitted with the filing suggests the company intends to dismiss employees, as it plans to advance October salaries to staff, to be deducted from future National Insurance payments.
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