Kentucky Fried Chicken (KFC) is once again grappling with operational turmoil in Israel, as one of its key franchisees, Mefco, has abruptly shuttered eight of its branches, dealing a significant blow to the brand’s presence in the country. The closures include locations in Arab communities, two branches in Be’er Sheva, and one in Ramla, sending shockwaves through the fast-food industry and raising concerns about KFC’s long-term viability in the Israeli market.
Mefco, an Arab-Israeli-owned franchise operator, managed nearly 40% of KFC’s footprint in Israel. However, as of now, the company has ceased all operations, effectively cutting KFC’s presence in Israel nearly in half. This leaves the global fast-food giant with only 12 operational outlets, primarily in major urban centers like Tel Aviv, Haifa, and Rishon LeZion.
A Dramatic Exit: Mefco’s Downfall
The affected locations span across the country, from Nof HaGalil and the Kinneret Mall in Tzemach to Kfar Saba, Zikhron Yaakov, and Yarka. Perhaps the most impactful closures are the two branches in Be’er Sheva—one located in the bustling BIG shopping complex and another at the popular Cinema City. These shutdowns mark a significant retreat for KFC, which had hoped to solidify its presence outside Israel’s central region.
Industry insiders suggest that Mefco’s troubles had been brewing for some time. The franchisee, which predominantly oversaw northern Israeli operations, had already been forced to close locations in the Arab-majority cities of Umm al-Fahm and Daliyat al-Karmel due to declining sales. According to retail experts, the ongoing war in the region played a pivotal role in diminishing foot traffic and reducing consumer spending at these locations.
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— Vigilante🥷 (@Vigilante2801) February 20, 2025
One shopping mall CEO, who housed a KFC branch, lamented a staggering 25% decline in revenue over the past year, emphasizing how the war not only deterred customers but also curtailed investments in marketing and store maintenance. “The war hurt the business tremendously,” he admitted. “Store appearances suffered, advertising budgets shrank, and ultimately, customers stopped coming in.”
A Franchise Model in Crisis?
KFC’s presence in Israel operates under a unique bifurcated franchise system, with two separate operators—one Arab-owned (Mefco) and the other controlled by a Russian investor. With Mefco’s abrupt departure, speculation is swirling that KFC’s corporate leadership may attempt to salvage the situation by selling the abandoned locations to the Russian franchisee in an effort to stabilize operations.
This latest setback is just one in a long history of challenges KFC has faced in Israel. The brand has struggled to find a sustainable foothold in the country, primarily due to issues surrounding kosher compliance. Previous franchise attempts failed when KFC attempted to adjust its signature recipe to comply with kosher dietary laws—removing milk powder from its iconic fried chicken coating. This alteration proved disastrous, leading to underwhelming sales and eventual closures.
When KFC made its triumphant return to Israel in 2019, it did so with a bold decision: to forgo kosher certification entirely and maintain the authentic taste of its world-famous fried chicken. This strategy initially showed promise, particularly in areas with large Arab populations where kosher laws were less of a concern. However, the company’s reliance on a divided franchise model, coupled with external geopolitical pressures, has once again placed
