Greece’s business environment is daunting to most operators, but Premier Capital plc, the Maltese-owned McDonald’s franchisee, describes its first six months in the crisis-hit country as “positive” as it readies itself to seize opportunities.
Our people in the market are living with a very tough situation every day
Premier Capital was named developmental licensee for McDonald’s in Greece last year, taking over 19 restaurants in and around Athens, and given a mandate to become key in the brand’s future in the country. Premier Capital’s portfolio currently also includes eight restaurants in Malta, 10 in Estonia, nine in Latvia, and eight in Lithuania.
“The experience in Greece has most definitely been interesting,” managing director Melo Hili told The Times Business.
“The takeover of a business like this was always going to be very challenging. But the macro-environment in the market has made things that much more challenging. This is a very turbulent time in Greece’s history – a period that has seen life for the Greek people change dramatically.
“We knew that the business presented us with a complex task and our view of the situation was that, if handled correctly, a crisis of this proportion presented the business with abundant opportunities. We remain very versatile to ensure we are well placed to make the best of these opportunities when they present themselves.”
Mr Hili added that Premier Capital was “lucky enough” to deploy a strong management team in Greece from day one, with most players handpicked internally after proving their mettle in other markets. The transition into Greece was smooth, allowing the team to hit the ground running, and able to make key changes to the existing business immediately.
“All told, the balance of the first six months is a positive one,” Mr Hili said. “The task is obviously still a very daunting one but we are not perturbed by this. We are confident we can make the McDonald’s business in Greece a success.”
A relatively stable summer with positive tourist numbers led to increased business on the Greek Islands. But austerity measures, including the VAT hike to 23 per cent, took the wind out of the economy’s sails in the fourth quarter.
Shattered consumer confidence and shrinking disposable income affected all businesses immediately. Mr Hili pointed out that brand penetration actually improved slightly, but frequency of consumer visits fell as patrons tightened their purse strings and curtailed their spend.
With price now a major factor in purchase decisions, brands have made the downward adjustments, intensifying competition and making margin protection increasingly challenging.
McDonald’s in Greece has had to adapt to the climate but with value an intrinsic feature in the brand DNA, it was able to quickly launch new offers to continue to give customers choice across the various price levels in its menu.
“Our people in the market are living with a very tough situation every day,” Mr Hili said of the general mood in the country. “Hopefully, the new year will inject some positivity in the market. Many Greeks hope the worst is behind them and that they can now start to get on with the rest of their lives – even if this is done in a new reality.”
The market reality for the brand in Greece differs greatly from any other. McDonald’s is a relatively small player in its sector, dwarfed by local brands Goody’s and Everest. The key challenge for Premier Capital, Mr Hili said, is to ensure every opportunity presented by the crisis is leveraged so that penetration and market share grows. Brand positioning has to be strengthened in such a way as to encourage people to keep it in mind, and growth is driven both in terms of number of restaurants and consumers.
Mr Hili said Premier Capital is relishing the challenge, particularly as the company saw there were ample opportunities for growth. The population of 11 million – swelled by a further five million annual tourists – was serviced by fewer than 30 McDonald’s restaurants, some of which did not operate in winter. The opportunity to develop more restaurants and to cater to untapped parts of the market was “huge”.
“Obviously we are not in Greece just to increase the number of stores in our portfolio,” Mr Hili explained. “Ultimately, our success is judged by the bottom line results we achieve. With the right development plan, we can manage to move all the numbers of this business in the right direction. We are confident we have the right brand, with the right products and the right people to be able to succeed, so we look forward to the challenge.”