My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Many Taco Bells Hit By Money Crunch

2 min read
Opinions expressed by Entrepreneur contributors are their own.

Irvine, California-Numerous Taco Bell franchisees, squeezed by a drop in sales, are delinquent on loans they took out to buy restaurants from the Irvine, California-based chain's parent company, according to sources familiar with the transaction.

The extent of the delinquency isn't clear, but as many as 1,000 restaurants-one-quarter of the Taco Bell franchised outlets in the United States-could be "at risk unless something is done," said analyst Damon Brundage at Raymond James & Associates.

He made the assessment after talking with officials of Taco Bell's parent, Tricon Global Restaurants Inc., which also owns the Pizza Hut and KFC chains.

Taco Bell's sales have been hurt by consumer concern about a recall of taco shells that contained Starlink, a genetically engineered corn not approved for human consumption.

During Tricon's short life as an independent company, selling stores to franchisees has become almost as important to its well-being as selling pizzas, burritos and buckets of chicken.

The strategy of refranchising some Taco Bells and other restaurants, as the practice of converting company-owned restaurants into franchised units is known, has given Tricon's earnings a healthy boost since it was spun off by PepsiCo Inc. in 1997. But some of the refranchising effort is now coming back to haunt the company. Indeed, bankruptcy filings by some distressed franchisees are a real possibility. In recent months, two large Taco Bell operators did just that.

"Delinquencies have been on the rise," said Jeffry Butcher, controller of Bay View Capital Corp., a San Mateo, California, concern negotiating with Tricon on a possible solution.

Tricon announced that it has set up a $15 million loan pool to help cash-strapped Taco Bell franchisees. The company added that it might have to repurchase some restaurants. -Los Angeles Times

More from Entrepreneur

Kathleen, Founder and CEO of Grayce & Co, a media and marketing consultancy, can help you develop a brand strategy, build marketing campaigns and learn how to balance work and life.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.
Start My Plan

Latest on Entrepreneur