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Domino's Pizza franchisee struggling in Israel - records loss for third year

By Rotem Starkman
April 03, 2003

Omni Food Brands, the owner of the Domino's Pizza franchise in Israel, yesterday reported a NIS 7 million loss in 2002. This comes on the heels of a NIS 2.3 million loss in 2001 and a NIS 7.2 million loss in 2000.

Domino's Pizza is one of several international fast food franchises that have struggled in Israel, including Burger King, Kentucky Fried Chicken, Dunkin' Donuts, Pizza Hut, Haagen Dazs, Subway and Starbucks.

Omni Food Brands, controlled by Ian Fisher (23 percent), the Almog family (23 percent) and a foreign firm named Mar Yad (43 percent), operates 19 Domino's Pizza branches in Israel and has a subsidiary role in seven others.

The company is initiating a number of efficiency measures to cut expenses and plans to sell off some of its assets. Earlier attempts to boost finances included a NIS 5.5 million injection of funds by the owners in 2000-2001. Some of this was later converted into shares.

In 2002, and again at the beginning of 2003, the shareholders provided another NIS 2 million. To attain expanded bank credit, the owners have also committed to providing addition funds if necessary.

One of the reasons for the lack of success of Domino's Pizza and Pizza Hut is the competition between them that demands high advertisement costs and special discount offers. Local pizza ventures, on the other hand, have lower operating costs.

Entering the pizza market in Israel is relatively easy compared to the hamburger business, for example. Equipment is relatively simple and inexpensive, and large storefronts are not required. Regulatory and kashrut approvals are also relatively easy to attain. All this makes it easy for local "mom and pop" pizza operations to compete with the likes of Domino's and Pizza Hut.