Yum Brands ended its deal with Encanto Restaurants, and every KFC and Taco Bell on the island closed Monday. Some employees learned about it at the door.
Employees started arriving around 10 a.m. Monday. The doors stayed locked. El Nuevo Día found KFC and Taco Bell workers waiting outside restaurants that had shut with no reopening date, and sources told the paper that Encanto Restaurants, the island's operator, had not known the decision was coming either.
Yum Brands put it plainly in a statement to QSR Web: "Unfortunately, Encanto can no longer operate in a way that meets our standards. All KFC and Taco Bell restaurants on the island will close while we identify a new franchise partner."
That is 83 KFCs and 38 Taco Bells, according to W Journal. Encanto has been the exclusive operator of both brands since 2004 and calls itself one of the 10 largest private employers in Puerto Rico, with more than 3,000 employees and 180 restaurants, Nation's Restaurant News reported. Its Pizza Hut and IHOP units are not part of Yum's move.
The warning signs were public. W Journal reported inventory shortages and months without air conditioning at many Encanto restaurants after delayed supplier payments, plus more than 70 court filings totaling $4.1 million as of July. It also reported that Yum has been negotiating with Ecuador-based Grupo Serrano, a KFC master franchisee across Latin America. Yum hasn't confirmed that, and Encanto hasn't commented.
Here's the part every franchisee should sit with. This was not a bankruptcy. Nobody went to court. A franchisor decided an operator no longer met its standards and took an entire market dark in a single morning. Compare that with Wendy's, which spent months in bankruptcy court with Meritage, or with Bloomin' Brands this week, which chose to finance and bid for its failing Outback operator to keep the lights on. Yum picked the cleanest break available.
The island's economics make the replacement harder. A Puerto Rico Restaurant Association study found one in three restaurants considering closing, with 51% naming electricity costs as their biggest problem and 17% operating at a loss, NRN reported.
The first rapid-response job fair for the laid-off workers, set by a regional career center for Tuesday, was with an operator hiring for Popeyes.
Revscale Media (illustration)Out West Restaurant Group runs 61 Outbacks and owes nearly $320 million. Bloomin' Brands has offered $26.3 million to take the restaurants back, which would pull most of Outback's U.S. franchise system in-house.
Revscale Media (illustration)The nearly 200-unit iced tea chain becomes the third brand at a restaurant-only sales firm whose team includes the IFA's board chair.
Revscale Media (illustration)Yum says drive-thru voice AI lifts satisfaction 6% and sales about 1.5% where it runs. Taco Bell U.S. same-store sales still fell 4% in the quarter.
TGI FridaysA creditor trustee says former owner TriArtisan drained the chain for a decade. The new management says two more U.S. franchisees are weeks away.
Revscale Media (illustration)The deal folds an AI front office for home care agencies into a scheduling platform that says more than 900 agencies use it.
Revscale Media (illustration)Wendy's, Dine, Xponential and MTY have all drawn outside buyout offers in about a week. Every pitch promises patient capital. None of them asks the franchisees.
