Smart Service K&K, the company operating 12 branches of KFC in Israel and employing approximately 100 workers, has filed an urgent application with the Be'er Sheva District Court seeking temporary relief and the appointment of a temporary trustee.
The application, submitted under Israel's Insolvency and Economic Rehabilitation Law, requests a freeze on legal proceedings, restrictions on the disposal or transfer of company assets, and a stay of proceedings against the business. The company hopes the measures will allow it to continue operating its restaurants as a going concern.
KKFC operates 12 restaurants in Israel,
(Photo: PR)
According to the filing, the company's liabilities include approximately 37 million shekels (about $11.9 million) in shareholder loans, 9.5 million shekels (about $3.1 million) in ordinary unsecured debts, 1.9 million (about $610,000) shekels owed to employees and 1.2 million (about $385,000) owed to public authorities. The company attributed its cash flow difficulties to several factors, including the October 7 attacks and subsequent security escalations.
KFC's turbulent history in Israel
KFC first attempted to enter the Israeli market in the late 1980s, opening a single restaurant in Tel Aviv. The venture was short-lived, and the branch closed soon after opening.
In October 1993, the American fried chicken chain returned through Clal Trade, which also held the Pizza Hut franchise in Israel. It opened a kosher restaurant at the Golden Mall in Rishon Lezion.
In 2003, the franchise was transferred to a partnership between Dor Alon, controlled by businessman Dudi Weissman, and entrepreneur Udi Shamai. Five years later, Dor Alon sold its stake to Shamai. At its peak during that period, the chain operated eight restaurants.
The branches subsequently transitioned to kosher certification. KFC approved replacing the milk powder used in its signature chicken coating with soy powder and switching to kosher-slaughtered chicken. However, the changes affected the product's quality, and sales declined sharply. By 2012, the chain's last Israeli restaurant had closed.
KFC made its fourth attempt to establish a presence in Israel in February 2020, opening a restaurant in Nazareth. This time, the chain returned without kosher certification to preserve its original recipe. Its expansion strategy envisioned dozens of restaurants, particularly in cities outside Israel's central metropolitan area and in Arab communities.
By 2024, KFC had approximately 20 locations across Israel. But in March 2025, one franchisee shut down eight restaurants, representing roughly 40% of the chain, following a steep decline in revenue.
Today, KFC operates 12 restaurants in Israel, including locations in Tel Aviv, Givatayim, Rishon Lezion, Kfar Saba, Netanya, Ashdod, Kiryat Ekron and three branches in Haifa.
The latest court filing raises fresh uncertainty about the chain's future in Israel, although the company is seeking protection specifically to keep its remaining restaurants operating.