KFC, Pizza Hut franchise dispute in Türkiye impacts nearly $170M industry
A signboard displaying the logos of KFC and Pizza Hut, two globally recognized fast-food chains owned by U.S-based fast-food corporation Yum! Brands. (Courtesy of Getty Images)
KFC and Pizza Hut, generating approximately ₺6 billion ($169.7 million) annually in Türkiye, are at the center of a major franchise dispute.
Yum! Brands, the American parent company of both fast-food chains, announced the termination of its franchise agreement with Is Gida, citing failure to meet operational standards.
Yum! also revealed plans to close 537 restaurants temporarily. Is Gida, however, rejected the allegations, calling the decision “unilateral and hasty.”
Why it matters
The dispute creates significant uncertainty for Türkiye’s fast-food sector, impacting 7,000 employees and franchise operators. The temporary closure of KFC and Pizza Hut outlets could disrupt both the market and supply chains.
Details
- Yum! Brands’ announcement: Yum! stated that Is Gida’s inability to meet global standards prompted the termination, affecting 283 KFC and 254 Pizza Hut restaurants across Türkiye.
- Chris Turner, Yum! Brands CFO, indicated the closures will be reflected in Yum!’s global store count by the first quarter of 2025.
- Turner added, “Recent sales in Türkiye are significantly below global averages per restaurant.”
- Is Gida’s response: Is Gida contested the claims, asserting that all their restaurants meet Yum!’s global standards, as verified by independent third-party audits.
- The company highlighted a 300% growth in restaurant numbers over three years and noted it was awarded the “Yum! Growth Partner” title in 2023.
- Is Gida stated the decision was made “due to financial concerns” and vowed to continue operations.
KFC and Pizza Hut have seen multiple ownership changes in Türkiye over the last 12 years. Yum! Brands reclaimed direct operations in 2013 before Is Gida took over as the master franchise holder in 2020 and 2022.
Challenges, impact
- Employee uncertainty: Many restaurant staff, including those in Istanbul, reported being unaware of potential closures, following developments through media reports.
- Supply chain concerns: A major poultry supplier disclosed that Is Gida has faced financial difficulties for months, reducing supply volumes.
- Market instability: The fast-food chains have experienced operational turbulence in Türkiye, with past ownerships including Süzer Group and Abraaj Capital.
What they’re saying?
- Chris Turner, Yum! Brands CFO: We look forward to continuing to serve customers in Türkiye in the future.
- Is Gida: The decision was unilateral and made hastily due to financial concerns. We are continuing our operations without interruption.
Zoom out
This dispute highlights operational and financial challenges in Türkiye’s fast-food sector, amid economic volatility. While Yum! Brands intends to maintain its presence in the Turkish market, the franchise fallout could lead to significant short-term disruptions and potentially reshape the sector.
