Since the enduring Israel-Palestine conflict, KFC has faced increasing criticism about its business operations throughout Israel. The international fast-food corporation faces criticism from activists alongside client groups who view its Israeli business transactions as supporting the Israeli economic system, even though it avoids taking sides politically. Global business entities face protests alongside boycotts because they support Israeli operations, which shows how international politics influence worldwide commercial activities.
KFC advances the development of Israeli suppliers when it acquires its Israeli locations from Israeli vendors. This strategy supports regional agriculture and food production, financially benefiting Israeli producers and suppliers. Through local purchases, KFC strengthens its commercial integration into the Israeli market by supporting local companies and jobs in the Israeli food supply chain. This local sourcing approach fits nicely with KFC’s larger business plan in Israel, where it maintains its brand identity while catering to local preferences and logistical needs.
What kind of partnership of KFC have with Israel?
In contrast to a direct corporate ownership model, KFC’s collaboration with Israel is mostly based on local franchise agreements. Local franchisees oversee the daily operations of the KFC locations around Israel to administer the business. KFC Israel has between 12 and 20 locations throughout different cities as of early 2025, and its two primary franchisees are one Russian and one Arab. Due to financial issues made worse by the regional strife, Mefco, one of the major franchisees that operated around 40% of KFC’s outlets in Israel, recently closed all of its locations, leaving the other franchisees to carry on.
KFC’s 2019 re-entry and subsequent growth in Israel are indicative of a business plan aimed at entering the Israeli market, including Arab and peripheral sectors, without obtaining kosher certification in order to preserve the original recipe. Under the partnership model, local franchisees autonomously run the restaurants while adhering to KFC’s brand rules, sourcing ingredients locally, and adapting the brand to the Israeli market.
Yum! Brands, a multinational parent business that has indirect ties to Israel through investments in Israeli internet startups and marketing platforms, including the acquisition of the Israeli company Tictuk Technologies, is the corporate owner of KFC. Although KFC maintains a neutral position and concentrates on its business activities, activists have criticized the company and called for a boycott because they believe that these ties assist Israel politically and economically.
What challenges has Mefco faced in operating KFC locations in Israel?
Due to serious difficulties, Mefco, one of KFC’s principal franchisees in Israel, had to close eight of its outlets and eventually shut down all of its business, cutting KFC’s presence in Israel in half. Among the main difficulties Mefco faced were:
- Financial loss
Mefco closed several branches, including those in Arab towns and cities like Be’er Sheva, Ramla, and others in northern Israel, primarily due to financial difficulties, the company said.
- Impact of regional conflict
Regional unrest, along with the ongoing conflict, caused consumer behavior to decline dramatically while sales and foot traffic diminished substantially. Internal sources and executives of shopping malls reported that Mefco-operated stores faced 25% less sales than the previous year. They attributed this decline to the war’s detrimental effects on business, fewer customers, and lower advertising and maintenance spending.
- Geographical and Demographic Challenges
Mefco mainly oversaw locations in northern Israel and cities with an Arab population, like Umm al-Fahm and Daliyat al-Karmel, where previous closures were prompted by dwindling sales.
- Operational Challenges
The franchisee’s operational difficulties were made worse by the combination of financial strain and declining consumer spending, which resulted in worsening store appearances and less marketing.
- Problems with Competition and Structure
The division of KFC’s franchise model in Israel between Mefco, an Arab-owned company, and a Russian-owned franchisee may have made operational efficiency and a cohesive brand strategy more difficult. In order to stabilize the brand’s position, there is speculation that KFC may consolidate operations by handing over Mefco’s closed restaurants to the Russian franchisee.
What were the main financial losses of KFC due to Israeli-Palestinian conflict?
KFC has suffered significant financial losses as a result of boycotts and demonstrations brought on by the Israel-Palestine conflict, especially in nations with a majority of Muslims and areas that support the Palestinian cause. Important financial effects consist of:
- Malaysia
Citing “challenging economic conditions” that are generally linked to boycott movements over Israel’s Gaza operation, QSR Brands, the franchise operator for KFC, temporarily closed more than 100 locations, primarily in states with a plurality of Muslims, like Kelantan.
- Indonesia
In the first quarter of 2024, KFC Indonesia reported a startling net loss of over US$21.5 million (348.83 billion rupiah), more than 60 times the loss from the year before. Following the start of the Gaza war, pro-Palestinian boycotts were directly responsible for this precipitous decline.
- Middle East
In the face of boycotts and geopolitical unrest, Americana Restaurants, the biggest franchisee for KFC and other brands in the region, reported a 48.2% drop in profits to $117.4 million over nine months. The corporation blamed fewer sales as a result of the regional war and a downturn in consumer demand for the 15.3% drop in revenues to $1.61 billion.
- Pakistan
Several mob attacks and damage at KFC locations have resulted in closures and increased security expenses. Following attacks on KFC locations amid demonstrations against alleged Israeli and American support, more than 170 people were taken into custody. KFC’s business operations throughout the nation have suffered as a result of these disruptions.
In general, decreased consumer traffic, forced store closures, vandalism, and reputational harm in important markets, particularly in Southeast Asia, the Middle East, and South Asia, are the main causes of KFC’s financial losses as a result of the Israel-Palestine conflict. Millions of dollars in lost sales and profit decreases have resulted from the boycott-driven slowdown, and there are no immediate prospects that things will improve until the crisis is resolved.
Public reaction to the boycott of KFC
The KFC boycott has provoked strong feelings in several nations, especially in areas with a majority of Muslims and among pro-Palestinian groups. Calls for a boycott of KFC and the Pakistan Super League (PSL), which KFC sponsors, were sparked in Pakistan after a KFC social media post was seen as making fun of the situation of displaced Palestinians in Gaza. People criticized KFC on social media for being insensitive and for associating their company with the misery in Gaza.
In nations like Egypt, Jordan, Malaysia, and Indonesia, the boycott campaign has gathered steam. The Egyptian public’s avoidance of KFC, together with other Western fast-food spots, became evident through reports showing that these dining establishments were completely vacant. The spread of pro-Israel warnings through social media networks prompted people from Egypt and Arab communities to abstain from these businesses, leading to reduced visits and earnings at restaurants.
The public’s reaction has resulted in real economic repercussions. Local media blamed KFC’s closure of more than 100 locations in Malaysia on boycotts by customers over the company’s purported connections to Israel. The combination of political and humanitarian matters initiated by consumer response forces multinational corporations to modify their business procedures and advertising strategies.
The supporters behind boycotts predict that breaking business relationships with Israeli enterprises or suspected Israeli policy supporters will lead to operational changes that modify political situations. The demand for KFC boycotts originates among pro-Palestinian groups due to the chain operating in Israel, yet missing from the BDS (Boycott, Divestment, Sanctions) list.
The truth behind KFC’s support for Israel
Although KFC does not openly endorse Israel politically, its economic practices and corporate connections have given rise to charges and suspicions of covert support. KFC returned to operate in Israel during 2020, establishing about 20 chains while sourcing all its products locally and backing local suppliers and businesses. The business stands neutral on political matters, especially regarding the Israel-Palestine conflict, while abstaining from supporting Israel or its leadership.
