Pizza Meter is in yards of trouble. The company, which runs 24 outlets throughout Israel, mainly through franchisees, sought court protection from creditors yesterday.
The parent company and the four outlets it owns outright owe NIS 16 million, according to its petition. But Tel Aviv District Court Judge Varda Alshech refused to grant protection at this point, and scheduled another hearing Wednesday.
The company-owned branches include two in Tel Aviv, one in Kfar Saba and one in the Krayot outside Haifa. According to the petition, the parent company owes NIS 1.7 million to Bank Hapoalim and NIS 170,000 to Bank Leumi, and NIS 8.5 million to suppliers. The four branches owe an additional NIS 5 million.
It's not as if Israelis rejected the company's elongated pizzas. Pizza Meter recorded sales of NIS 35 million in 2004. However, the previous year it lost NIS 3 million, widening its equity deficit to NIS 4.5 million.
Audited results for 2004 are not in, but Pizza Meter estimated its year-end accrued loss had reached NIS 6.2 million. To make matters worse, Pizza Meter was fined NIS 125,000 for employing illegal foreign workers.
Pizza Meter's early days indeed were salad days. The company opened its first outlet on Ibn Gvirol Street in Tel Aviv in 1997. By 2000, it had outlets on Tel Aviv's Allenby Street and Herzliya's Maskit Street. Business picked up in 2001, as the company began to sell franchises at a fast clip. Franchisees are entitled to use the company's logo in exchange for a fee and 4 percent of its sales. All franchisees are also obliged to set aside 3 percent of its turnover to a special fund earmarked for advertising and marketing.
The company's fast growth, however, forced it to spend far more on promotion than the contribution of franchisees, Pizza Meter said.
The request for court protection from creditors follows a similar request by Domino's Pizza, which went bankrupt in November 2003. The receivership on Domino's ended in March 2004, when the franchise's CEO and two operators acquired it. Domino's currently is reporting sales growth. Stiff competition from both Domino's and Pizza Hut, in fact, is one of the reasons for Pizza Meter's crash.
Pizza Meter is owned by Alex Gordon (75 percent) and Bernardo Belajovich (25 percent). The two initiated negotiations in the past few days with a potential investor, businessman Amir Wolf, according to the petition. Wolf previously served as international division and business development manager at Home Center.
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