Founded in 1990, the Domino's Israeli franchise was one of the fastest growing for the chain, with sales rapidly increasing year-on-year to NIS11 million in its third year, but in the wake of recent Israeli retail bankruptcies, including high profile fast food outlet Burger King, the company was unable to maintain the promising early form it showed.
In the statement to the exchange, franchise chief executive officer Assaf Greenberg outlined a renewal plan drawn up by Omni Foods. It required Bank Hapoalim write off some of the debt as part of a deal that would see new investment in the franchise. In order to finance this plan, Hapoalim demanded that Omni invest NIS5 million, a report by the Jerusalem Post stated.
Omni Food Brands, which runs the chain locally, announced that Bank Hapoalim had rejected the restructuring plan, with the bank also halting the company's credit.
Following the bank's outright refusal to cancel part of the company's debt, Omni admitted that it did not have the financial resources, nor the support from shareholders to keep the Domino's Pizza chain running. The bank's rejection of Omni's proposal caused doubt amongst shareholders and consequently they were reluctant to inject more capital. Omni also stated that it was unable to find any outside investors. As a result, it was cornered into ceasing its operations.
The company suffered increasing losses from NIS2.3 million in 2001 to NIS7 million in 2002 and had already lost NIS3.8 million in the first half of 2003.
The Domino's Israeli bankruptcy follows that of Burger King earlier this year. In total, Burger King's 56 Israeli retail outlets accumulated more than NIS80 million in debts. Other food franchises that suffered in Israel are Dunkin' Donuts, Kentucky Fried Chicken, Nathan's Hot Dogs and Baskin Robbins ice cream, the paper said.