developing· Economy· Updated 13:53

KFC Israel Operator Files for Bankruptcy Amid 50 Million Shekel Debt

The Israeli franchisee of the KFC fast-food chain, Smart-Service D&K (also referred to as Smart Service Key and Key), has filed a request with the Beersheba District Court for bankruptcy protection and the appointment of a temporary trustee. The company, which operates 12 or 13 branches across Israel, reported debts totaling 50 million shekels.

5 newsrooms · 2 languages · since 12:12

Plus

KFC Israel Operator Files for Bankruptcy Amid 50 Million Shekel Debt — Illustration by baba

What happened

01The Israeli KFC franchisee, Smart-Service D&K, filed for bankruptcy protection in Beersheba with 50 million shekels in debt.
02The company operates 12 or 13 branches across Israel and owes 37 million shekels to its owners, Konstantin Kotov and Andrey Oskolkov.
03The franchisee blames the Swords of Iron war and conflict with Iran for reduced customer traffic, a hit to tourism, and a consumer slowdown.
04Sanctions on Russian financial institutions prevent the owners from injecting further capital into the Israeli business.
05Despite a 12% revenue increase to 71 million shekels in 2024, the company incurred a loss of over 9 million shekels.
06Landlords have launched legal action over unpaid rent, and some branch leases face termination.
07The company plans to dismiss employees as part of a short-term strategy to keep profitable branches running.

The franchisee attributes its financial distress to the Swords of Iron war, which began on October 7, 2023. The conflict led to a sharp decline in profitability, reduced customer traffic, a severe impact on tourism, and a general consumer slowdown, while fixed expenses and rent continued. Additionally, the company faced rising costs from opening new branches and periods of closure due to conflict with Iran.

Further complicating the situation, the company's Russian owners, Konstantin Kotov and Andrey Oskolkov, are unable to inject capital due to sanctions on Russian financial institutions. The owners had previously invested 37 million shekels in owner loans to keep the business afloat. While the company's revenue grew by 12% to 71 million shekels in 2024, its losses surged to over 9 million shekels.

As a result of the financial crisis, property owners have initiated legal action over unpaid rent, and some leases face termination. The company has submitted a plan to continue operations at profitable branches, which includes plans to dismiss employees as part of a short-term operational strategy.

Summarized by baba from the reports of 3 newsrooms. Updated 13:27

Latest report: Ice. Read Ice’s original