All KFC and Taco Bell restaurants in Puerto Rico have temporarily closed after Yum! Brands ended its franchise relationship with local operator Encanto Restaurants, triggering a search for new franchise partners to restore the brands’ presence across the island.
Yum! Brands has terminated its franchise relationship with Encanto Restaurants, resulting in the closure of all KFC and Taco Bell outlets across Puerto Rico. The decision, announced on November 2, follows concerns over the operator’s ability to maintain the quality and operational standards required by the global restaurant group.
Both brands are now seeking new franchise partners to resume operations. However, neither has announced a potential replacement operator or provided a timeline for reopening.
In a statement, Yum! Brands said it had made the “difficult decision to end its relationship” with Encanto Restaurants because the operator “can no longer operate in a way that meets our standards.”
The company added that it remained “deeply committed to Puerto Rico” and was working as quickly as possible to welcome customers back.
The shutdown affects a substantial restaurant network. KFC had 83 locations across Puerto Rico according to figures published by Encanto Restaurants in December 2024. More than 80 of the operator’s restaurants were KFC outlets. The exact number of Taco Bell locations affected has not been disclosed.
Encanto Restaurants operated approximately 180 restaurants across its wider portfolio and employed more than 3,000 people in Puerto Rico. Its business included KFC, Taco Bell, Pizza Hut and IHOP, although Pizza Hut’s ownership changed following its sale to LongRange Capital in 2026.
The franchise relationship between Encanto and Yum! Brands dates back to 2004, when the Puerto Rican company became the exclusive operator of KFC, Taco Bell and Pizza Hut on the island. KFC first entered Puerto Rico in 1967, while Taco Bell began operating in the market in 1985.
The termination also comes amid financial and legal challenges for Encanto. The company has reportedly faced more than 30 collection lawsuits and eviction judgments involving restaurant properties. Earlier legal proceedings also involved claims relating to unpaid rent and outstanding business debts. However, Yum! Brands has publicly cited operating standards as the reason for ending the franchise relationship.
The closures come as Puerto Rico’s restaurant industry faces broader operating pressures. A recent industry study found that one in three restaurant operators on the island was considering shutting down. Rising operating expenses, particularly electricity costs, have emerged as a significant challenge, with more than half of surveyed operators identifying them as their biggest concern.
For Yum! Brands, the immediate priority is finding new franchise partners with the financial resources, operational capabilities and local market knowledge to take over the restaurant networks. The transition will be important in restoring the two brands’ presence in a market where they have operated for decades.
The closures also highlight the risks associated with relying on local franchise operators to manage established international restaurant brands. While franchising enables global companies to expand through local partnerships, maintaining brand standards, operational consistency and franchisee stability remains critical to protecting long-term market presence.
Neither KFC nor Taco Bell has indicated plans to permanently withdraw from Puerto Rico. Both have expressed their intention to return through new franchise partnerships, although the process of identifying replacement operators and reopening the restaurants remains uncertain.
