JERUSALEM—Bank Hapoalim will close the Domino's Pizza franchise in Israel if the owners do not inject cash into the failing business.
According to a report in the Daily Haaretz, the bank has notified the franchise owners, Omni Food Brands, that if they do not come up with more funds in the next few days, Hapoalim will cut off Domino's line of credit and move to liquidate the business.
The franchisee owes the bank NIS 16 million (U.S. $3.3 million); the bank is demanding the owners put up another NIS 5 million (U.S. $1 million) in order to finance the firm's recovery plan.
Domino's owners, who have invested over NIS 7 million (U.S. $1.44 million) in the franchise since 2000, have yet to respond to the bank's request. Sources close to Omni say it's likely they'll invest more in the franchise.
Omni is owned by Danny Alpher (43 percent), Ian Fisher (23 percent) and the Almog family (20 percent); the rest is publicly held. Domino's operates 24 units in Israel, seven of which are run by sub-franchisees. The firm employs 700 workers.
The recession and the security situation, along with the intense competition in the pizza business—particularly from independent operators—have led Domino's to years of losses in Israel. Losses in 2001 were NIS 2.3 million (U.S. $472,000), and climbed to NIS 7 million (U.S. $1.44 million) in 2002. For the first half of 2003, the company is NIS 3.8 million (U.S. $780,000) in the red.
Revenues for the first half of 2003 were NIS 19 million (U.S. $3.9 million), down 30 percent compared to the same period in 2002.
To enable the firm to continue functioning, the owners lent Domino's NIS 5.5 million (U.S. $1.2 million) in 2000 and 2001, and put up another NIS 2 million (U.S. $410,000) in 2002.
Assaf Greenberg, CEO of the Domino's franchise, implemented a recovery plan for the chain last February, which included cutbacks at its headquarters and the stoppage of all food production in its logistics center. Its nationwide call center was shuttered at the end of October.
According to the report, Domino's is one of several international fast-food franchises struggling in Israel, including Burger King, Kentucky Fried Chicken, Dunkin' Donuts, Pizza Hut, Haagen Dazs, Subway and Starbucks.