Fate of workers is in the air
All KFC and Taco Bell restaurants in Puerto Rico temporarily closed Monday after Yum! Brands terminated its relationship with Encanto Restaurants, the local operator of both fast-food chains, citing the company’s inability to meet corporate operating standards.
The Kentucky-based restaurant giant said it made the “difficult decision” to end its franchise arrangement with Encanto after determining that the company could no longer operate in a manner consistent with Yum!’s expectations.
“Unfortunately, Encanto can no longer operate in a way that meets our standards,” Yum! Brands said in a statement. The company added that it remains committed to the Puerto Rico market and is working to identify a new franchise partner and reopen the restaurants as quickly as possible.
KFC Puerto Rico and Taco Bell Puerto Rico echoed that message in separate social media posts, telling customers they hope to resume service soon.
The decision affects only the KFC and Taco Bell brands operated by Encanto Restaurants. Yum! Brands has not disclosed how long the restaurants will remain closed or when a new operator might be selected.
Encanto Restaurants, led by Humberto Rovira Figueroa, did not immediately respond to requests for comment.
The shutdown marks a dramatic development for one of Puerto Rico’s largest restaurant operators. According to the company’s website, Encanto operates 180 restaurants across the island and employs more than 3,000 workers. In addition to KFC and Taco Bell, the company also operates Pizza Hut and IHOP locations in Puerto Rico.
The company has deep roots in the local quick-service restaurant industry. Puerto Rico’s first KFC opened in 1967, while Encanto began operating Taco Bell restaurants on the island in 1985.
Encanto Restaurants reportedly faces dozens of collection lawsuits as well as multiple eviction proceedings. In some cases, the company reportedly reached agreements with landlords and suppliers, although several creditors have returned to court seeking payment.
The fate of employees working at KFC and Taco Bell locations remained unclear Monday. Neither Yum! Brands nor Encanto immediately provided information on potential workforce impacts.
The closure also comes at a difficult time for Puerto Rico’s restaurant industry. Operators across the island have struggled with labor shortages, rising supply-chain costs, and higher operating expenses, including increases in energy and fuel costs. Industry leaders have also pointed to the impact of U.S. tariff policies on imported goods.
A recent analysis prepared by Inteligencia Económica for the Puerto Rico Restaurants Association (Asore) painted a troubling picture of the sector’s health, finding that roughly one in three restaurants on the island is considering closing in the near future.
For Yum! Brands, the move adds to a period of significant restructuring. The company announced earlier this year plans to close 250 Pizza Hut locations in the United States and, in August, completed a pair of transactions valued at approximately $2.7 billion to sell Pizza Hut’s global operations and China business to separate buyers. While those transactions were not directly linked to Encanto’s operations, they underscored broader changes underway within Yum!’s global portfolio.
For Puerto Rico consumers, however, the immediate impact is tangible: every KFC and Taco Bell restaurant on the island is now closed while Yum! Brands searches for a new franchise operator capable of restoring two of the territory’s best-known fast-food chains.
