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The crisis has hit fast food chains

21 February 2013 / 18:02:36  GRReporter
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Restaurants like many other industries have been seriously affected by fiscal consolidation. According to the 2012 Hellstat data announced this week, restaurants selling and delivering pizza suffered the most. The decline in their turnover reached 30% compared to the period before the crisis. Traditional Greek souvlaki (skewers and wraps) suffered losses as well and the reduction in their turnover was 28%. Fast food restaurants failed to maintain the consumer interest and despite the lower prices, their turnover decreased by 26%. Chains selling sandwiches, refreshments and coffee lost 24% of their turnover compared with the period before the crisis. At the same time, the statistics show that one in four people in this industry lost their jobs.

"The crisis has made the Greeks cook lentils and moussaka at home more often than ordering food over the phone or eating out," a young housewife from the capital comments on the results of the Hellstat survey. Food chains and restaurants have been resorting to different strategies to attract customers - happy hours, lower prices for online orders, gifts and promotions for orders exceeding a certain amount. Although they have been using all known marketing tools to maintain or increase the number of their customers, the decline in their turnover is inevitable. The disposable income of working Greek households has decreased by half whereas unemployment has tripled compared to the pre-crisis period.

The analysis indicates that significant castling in the fast food industry has been undertaken that has also changed the course of the market. The company Applebee's literally stopped working without warning its employees on time, after it became clear that it was impossible for it to pay the debts it had accumulated. Similar was the case with the British chain Costa Coffee, which closed its business a few years after opening its first shop in Athens. The headquarters of McDonald's sold its 19 sites to the Premier Capital company, which has been managing the fast food restaurants of the brand in Malta, Estonia, Lithuania, Latvia and Greece since 2011.

Hellstat took a sample of the financial results of 229 thousand enterprises. The total turnover was 407.8 million euro and its reduction reached 11.5%. Earnings before taxes and interest decreased by 70% compared to the previous year and reached only 6.9 million euro. McDonald's losses before taxes increased to 21 million euro in 2011 whereas they were only 3 million euro in 2010.
 
Experts in the sector explain that restaurants have had to bear the burden of the decline in consumption as well as of all increases in VAT. It has reached 23% from 8% and inevitably affected the customer pocket negatively. The union of restaurant chains is warning that if the government does not reduce VAT for taverns, restaurants and other public eating establishments in the country, six thousand of them will close and more than 70 thousand people will remain without a job. For the time being, there are around 4.5 thousand bankrupt companies in the sector and more than 35 thousand people have lost their jobs.

Following extensive debate in the public domain, it has become clear that the government is discussing the option of reducing the VAT on tourist and food services from 23% to 19%. The union of restaurant chains reacted sharply to this proposal declaring it to be pointless. Businessmen in the sector note that if Greece really wants to be competitive with its tourist services which include restaurants, the VAT rate should be reduced to 7% or 10%.

 

Tags: EconomyMarketsRestaurantsCrisisGreeceDecline in turnover
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