Will Sbarro leave Israel?
Delay in payments to suppliers, conflict between global fast food chain and Israeli franchiser threatening its activity in country
Is another fast food brand about to leave Israel? Yedioth Ahronoth's economic supplement, "Mamon," has learned that a conflict between the global Sbarro chain and its Israeli franchiser, Dan Werner, is threatening the American pizza and pasta chain's activity in Israel.
The global Sbarro chain is threatening to sue the Israeli franchiser, claiming it failed to transfer royalty fees for the franchise. Sbarro Israel claims that the global chain failed to meet its commitment to support the local franchiser.
The BDI business information company recently issued a "red light" warning following a bounced check and delays in payments to suppliers of the Tukdan company, which owns the Sbarro franchise, and is controlled by businessman Dan Werner.
Some of Sbarro's leading suppliers have told "Mamon" that they continue to supply to the company, "but under close surveillance of what is taking place."
Another partner in the Tukdan company is Danny Hershkowitz (about 15%), who recently stepped down as the chain's manager. The chain is currently run by Tamir Nachum, a former Sbarro franchiser who works in the restaurant business.
Nachum said in response, "There is a legal dispute over small sums with global Sbarro, and we are talking through our lawyers. We have delayed the payment of royalty fees because global Sbarro has not been backing our rebranding plans. We wish to lead the chain to the 21st century. The 1980s are over and there is a need to accommodate the chain to the Israeli taste, which prefers thin pizza, but global Sbarro has not approved the change in our menus and has not sent a representative to Israel as required. Sbarro's pizza is one of the best in the country and we want to introduce deliveries and a healthier menu."
Asked if there was a chance that the Tukdan company would give up the Sbarro franchise in Israel, Nachum said, "I believe the problem will be solved within a month."
The chain's accounts were confiscated recently by the VAT Authority. According to Nachum, the payment has been settled and the confiscation would soon be lifted.
Sbarro is an international American fast food chain specializing in Italian food products.
It has 26 restaurants in Israel, which are located in most of the country's largest malls. Almost all the branches, apart from three, are run by franchisers.
The Sbarro franchise was introduced to Israel in 1995 by Yochai Peleg, who sold it to Dan Werner. Peleg, who operated the Gan Oranim banquet hall, fled Israel more than a year ago due to financial trouble.
Werner was the owner of Norcat, the largest catering company in Israel, which was sold to a foreign company. He is active in the catering and fast food business in aquatic and amusement parks in Israel. He recently began restructuring his holdings in the food industry and sold his share in two banquet halls.
Meanwhile, the Mutagei Zahav ("golden brands") company owned by Werner – which includes the Same Same, Juiceland and Coffee Bean chains – will likely be liquidated, due to the lack of sufficient demand for its management services. Coffee Bean is currently in negotiations with the Abulafia family of Jaffa.
Outdated menu
Sbarro is the biggest Italian fast food chain in the world with some 1,200 restaurants worldwide. It was founded in the late 1950s by Gennaro and Carmela Sbarro and their three sons – Joseph, Mario and Anthony – who emigrated from Naples to Brooklyn.The chain began its activity as an Italian delicatessen chain, and Carmela Sbarro still runs the main delicatessen in Long Island.
Sbarro Israel made headlines in the world when a deadly terror attack took place in its Jerusalem restaurant.
In the past few years the chain has been suffering from competition which has hurt its financial gains, particularly due to its outdated menu in light of the slew of gourmet pizzerias which have emerged in Israel and the recent health trend.
