Why Did KFC Go Bankrupt in Turkiye?

KFC in Turkey went bankrupt due to debt from fast expansion, economic troubles, boycotts over the Gaza conflict, and the main company ending their partnership. KFC closed all 537 restaurants in 2025, leaving 7,000 people without jobs, which is surprising given KFC’s global success.

KFC’s bankruptcy in Turkey, announced in early February 2025, marked a significant failure for the global fast-food giant, operated locally by Is Gida. This event, resulting in the closure of 537 restaurants and the loss of 7,000 jobs, was driven by a confluence of financial, economic, and geopolitical factors. Below, we explore the detailed reasons behind this collapse, providing a comprehensive overview for stakeholders and analysts.

Financial Mismanagement and Aggressive Expansion

Is Gida’s strategy of rapid expansion was a primary contributor to its downfall. From 2020 to 2024, the company grew from 138 KFC and 58 Pizza Hut locations to 537 outlets, a 300% increase in store numbers. This expansion was heavily debt-financed, accumulating a debt of 7.7 billion Turkish lira, equivalent to approximately $214 million at the time of bankruptcy. The CEO, Ilkem Sahin, noted that company assets, including factories, were seized by banks and state institutions, reflecting severe liquidity issues.

Turkey’s economic environment, characterized by persistent inflation (averaging 65% in 2024 according to the Turkish Statistical Institute) and rising interest rates, exacerbated this debt burden. The depreciation of the Turkish lira against the dollar made servicing dollar-denominated debts increasingly costly. Reports indicate that suppliers noticed reduced orders months before the collapse, signaling cash flow problems. This aggressive growth, while ambitious, stretched Is Gida’s resources thin, leading to operational and financial strain.

Additionally, employees accused management of financial mismanagement, including diverting funds for a $50 million mansion purchase and investments in Krispy Kreme outlets during financial turmoil, further compounding the company’s troubles.

Termination of Franchise Agreement by Yum! Brands

A critical blow came in January 2025 when Yum! Brands, the parent company of KFC and Pizza Hut, terminated its franchise agreements with Is Gida. Yum! cited Is Gida’s failure to maintain compliance with brand standards, a decision made after several months of engagement to resolve issues. Chris Turner, Yum!’s Chief Financial & Franchising Officer, emphasized the need for “3C” franchisees—capable, capitalized, and committed—which Is Gida could no longer fulfill. This termination, affecting 283 KFC and 254 Pizza Hut restaurants, led to their temporary closure and removed Is Gida’s operational lifeline.

Is Gida contested this, claiming its operations met quality standards and highlighting its growth award from Yum! in previous years. However, the rapid expansion likely compromised service quality, aligning with Yum!’s decision. This move was part of a broader strategy, as Yum! also reacquired master franchise rights in Germany, suggesting a global reassessment of franchise partnerships.

Economic Instability in Turkey

Turkey’s economic landscape in 2025, as outlined by the World Bank and other economic forecasts, posed significant challenges. GDP growth was expected to slow to 2.6% in 2025 after 5.1% in 2023, with inflation remaining a persistent issue. The Central Bank of the Republic of Türkiye had raised interest rates to 50% by 2024 from 8.5% in mid-2023, reflecting efforts to control inflation but increasing borrowing costs for businesses like Is Gida. Currency devaluation, with the lira shedding 37% of its value against the dollar in 2023, further strained foreign debt obligations.

These conditions impacted operational costs, with rising prices for poultry, oil, and packaging—core components of KFC’s menu—eroding margins. Employees protested unpaid January wages, highlighting cash flow issues, and Is Gida pledged to clear these by February’s end, but the damage to public trust was done. The economic vulnerability, compounded by the 2023 earthquakes and high current account deficits, created an unstable backdrop for Is Gida’s operations.

Geopolitical Tensions and Consumer Boycotts

Geopolitical factors, particularly boycotts linked to the Gaza conflict, played a significant role. Since late 2023, Turkey saw growing consumer movements against Western brands perceived as supporting Israel amid its conflict with Gaza. Reports indicated KFC sales dropped by up to 40% due to these boycotts, aligning with similar actions in Egypt, Jordan, and other Middle Eastern countries. Social media amplified calls to support local alternatives, with brands like Coca-Cola and Starbucks also affected.

Turkey, a predominantly Muslim country with strong cultural ties to the Palestinian cause, mobilized consumer power for political ends. The timing of these boycotts, intensifying in 2024, coincided with Is Gida’s financial unraveling, suggesting they acted as an accelerant to already strained revenues. While exact impacts are hard to quantify, the narrative of Western brands as protest targets likely reduced footfall, particularly in a market already facing economic pressures.

Comparative Analysis and Broader Implications

Globally, Yum! Brands reported robust profits of $1.49 billion in 2024, indicating the issue was localized to Turkey’s operator rather than a brand failure. This contrasts with KFC’s success in markets like China, where a cautious approach yielded growth. Is Gida’s strategy mirrored successful expansions elsewhere but failed to account for Turkey’s unique economic and geopolitical risks. The bankruptcy underscores the importance of localized strategies, with Yum! hinting at re-entering Turkey with a new operator, suggesting a strategic pivot.

Detailed Breakdown in Tables

To organize the key factors, consider the following tables:

These tables highlight the multifaceted nature of Is Gida’s collapse, combining financial overreach with external pressures.

Conclusion

KFC MENU Prices in Turkey was not a singular event but a culmination of financial overextension, operational failures, economic instability, and geopolitical backlash. Is Gida’s rapid expansion, while initially promising, became a liability in Turkey’s challenging economic climate, compounded by boycotts and franchise termination. This case study illustrates the risks of global brands in volatile markets, with lessons for future operators to prioritize sustainability and local responsiveness.