Lehem Erez Gets New Dough

Giora Naftali, one of the owners of Eden Springs (Mei Eden), has become a partner in the Lehem Erez chain of bakeries, joining Erez Komarovsky and Ilan Rom. Lehem Erez would not disclose details of the new ownership structure, but said that the new partnership involved an investment of millions of shekels.

"This is a private investment that is unrelated to other businesses," said Naftali, who owns 11 percent of Eden Springs. He added that there is "great business potential in the Lehem Erez brand."

According to industry sources, Naftali now holds a 50 percent stake in the chain.

Lehem Erez was experiencing cash flow difficulties following a NIS 3 million investment in a new plant in the Netanya industrial zone. Rom, who also serves as the company's CEO, said in January that Lehem Erez plans to solve its cash shortage by expanding the chain through a franchising system. There is potential to open 10 additional branches as franchises in Israel, Rom said at the time.

With Naftali on board, Lehem Erez said it will continue to pursue the franchising plan . The first franchise is slated to open soon in Jerusalem. Lehem Erez also said it is considering expanding its operations to Europe.

Lehem Erez was established eight years ago and now numbers 19 fully owned branches, including a restaurant in Herzliya Pituah, seven cafes, six stores, and five bakery stands in the Netanya industrial zone.

In January, Rom said that each franchise would be priced at about $50,000, plus 5 percent of monthly revenues. The start-up costs of each franchise would range between $100,000 and 200,000, depending on the size of the store (between 60 and 400 square meters).

"We want our franchise holders to be able to recover their investment within two years," Rom emphasized.