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After AppleBee’s now TGI Friday’s is threatening to retreat from Greece

24 July 2011 / 17:07:04  GRReporter
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The economic crisis may have affected especially the young people, where unemployment rates are constantly increasing, and it has been perhaps manifested mainly in the habit of eating out, which is rather limited lately, but the expected increase in VAT on all restaurants from 13% to 23 % in September represents a serious threat to the future not only of the restaurants but also of the food chain, created in recent years in Greece. After the decision to close down the facilities of Applebee's, which have 15 years presence in Greece, the owner of TGI Friday's in Greece appealed to the Ministry of Finance to reconsider its decision to increase the tax.

"I worry about a worker who has lost his job. I worry about a businessman who has closed his company. However, I also worry about the fate of my company, my employees in Friday's. I have been living in New York for 45 years, but never ceased to love Greece."

That emotional message sent to Greece the businessman Panagiotis Ksenopoulos who owns the franchise for the U.S. chain TGI Friday's in Greece. As stated in a letter to the newspaper "Vima" the restaurants are really affected by the economic crisis so far to an acceptable level, but the increase in VAT to 23% for the restaurant business can have disastrous consequences for the survival of all restaurants as a whole.

According to Nikos Nengas, General Director of the chain in Greece, TGI Friday's are affected by the crisis, but not as much compared to the rest of the market where traditional restaurants account for a decrease of about 25%, and fast food restaurants - 10%.

The turnover in 2010 amounted to 20 million euro, which is a 6% decrease as compared with 2009, while in 2011, it is believed to decrease by 10%.

The EBITDA results are positive in all 11 establishments (nine company ones and two with a management contract). The staff reached 570 people from 550, having in mind that no facility has been closed - one even opened last year in the new shopping center Athens Metro Mall, in Agios Dimitrios, Athens.

As he explains, if the increase in VAT is applied in the restaurants business, the company, like most companies in the industry, will experience losses and will be forced to close some facilities. It is noted that in Ireland, which also had serious economic problems such as those in Greece, the VAT for the hotel and restaurant business was reduced in July from 13.5% to 9% with respect to the competitiveness of tourism.

The history of TGI Friday's started by Alan Stillman, who made the first TGI Friday's restaurant in New York in 1965. As the «Newsweek» notes in an article in 1973, "a single New Yorker who was selling cologne, Alan Stillman, decided that the most effective way for a man to meet a hostess in his neighborhood is to buy a dilapidated pub, to renovate it with Tifani lamps and modern young waitresses and keeping in mind the careerists to call it TGIF (Thank God It's Friday).

Only a week later the police was forced to enclose Friday's, in order to cope with the huge crowds of young people who came. Hundreds of other institutions that copied Friday's quickly opened doors in many large cities, and thus a chain was founded."

Panagiotis Ksenopulos, closely monitoring the success of TGI Friday's in America decided to follow the successful foreign model and implement it at home. He left in his youth the town Voyo, Kozani area to search for his luck in New York while studying in university there, he worked in a restaurant to support his family. In the 70s most Greeks in New York began at low positions washing dishes or working as waiters, and gradually they developed and became businessmen, like himself, opening his first donut shop in Brooklyn.

Subsequently he acquired other eateries as well, working even in the field of shipping, still in America. In 1995, the businessman takes Friday's franchise in Greece and in 1997 he opened the first TGI Friday's restaurant in Athens, in Kifissia. Today the country there are 11 restaurants in the chain, which is represented in 60 countries and has 900 facilities.

Appeal to the Minister of Finance Evangelos Venizelos

In a letter to the newspaper "Vima" Panagiotis Ksenopulos, owner and president of Friday's Hellas, exposes the problem:

"I have been living in New York for 45 years, but I never stopped loving Greece. My work in New York is in the restaurant business and in 1997 decided to expand my activity and invest in Greece, bringing in the country the famous restaurant chain Friday's.

The company now has nine company restaurants and two 2 with a management agreement. It employs over 500 people. The economic crisis has affected the company, but today it survived and stood back up on its feet with minimal layoffs of workers. I am aware of the fact that in the restaurant business the black labor and VAT evasion are widely spread. There are, however conscientious companies.

Friday's Hellas has always paid, and is still paying all its obligations to the state. In 2010 it paid: VAT to the tax office in the amount of 1,662,000 euros, VAT to suppliers and third parties amounted to 1,598,000 euros, VAT for rental services amounting to 352,000 euros, income tax amounting to 520,000 euros, extraordinary contribution in the amount of 18,000 euros, social security contributions amounting to 3,026,000 euros.

The Ministry of finance included in the new measures also an increase in VAT for the restaurant business to 23 percent. This increase, if adopted, would be impossible for the law-abiding and conscientious companies. So the fate and future of companies like Friday's, but also of all immaculate firms will be uncertain and some of them won’t endure.

Tags: Applebees TGI Fridays chain restaurants closing crisis
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