The Puerto Rico KFC and Taco Bell operator owes $123.9 million against $29.8 million in assets, and most of the loss falls on a local bank and island suppliers, not the brands.
Banco Popular de Puerto Rico is owed $85 million. KFC and Taco Bell, the brands that just walked away, are owed about $3.4 million combined. That gap tells you who is holding the bag now that Encanto Restaurants is in bankruptcy.
Encanto filed for Chapter 11 on Nov. 5 in the U.S. Bankruptcy Court for the District of Puerto Rico, case No. 26-05345. It listed about $29.8 million in assets against $123.9 million in liabilities, Nation's Restaurant News reported.
The filing came three days after Yum Brands ended the franchise relationship and the island's KFC and Taco Bell restaurants went dark, a move we covered last week. Yum's explanation was one sentence: "Encanto can no longer operate in a way that meets our standards."
The creditor list reads like a map of the local economy. Caribbean Business, which reviewed the petition, counted $3.05 million owed to ad agency Arco Publicidad, $2.98 million to utility LUMA Energy, $2.6 million in payroll tax obligations to the IRS and $2.49 million to food and paper supplier Plaza Warehousing & Realty. KFC International Holdings is owed $2.28 million in royalties and Taco Bell Corp. $1.13 million. The petition says no money is expected to be left for unsecured creditors after administrative expenses.
The human cost is bigger. Payroll records Encanto gave Puerto Rico's labor department show about 2,700 workers displaced across roughly 180 locations, El Vocero reported.
Here's my read. Royalties are a sliver of this debt, so the brands lose little on paper. The bank, the utility, the ad agency and the food distributor lose a lot. That is the franchise model doing exactly what it was designed to do, and it's the dynamic behind Sunday's column on asset-light systems. Franchising spreads the risk. It just doesn't spread it evenly.
The filing doesn't say what happens to the Pizza Hut and IHOP restaurants Encanto also runs. The court has set a first conference for Jan. 22, 2027, where Encanto must explain why it filed and propose a timeline for a reorganization plan. Yum says it wants a new franchisee to reopen its restaurants quickly. Finding one with the capital to take on more than 80 KFCs on the island is the next test.
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