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article imageMcDonald's sues Milan for 24 million Euros over eviction

By JohnThomas Didymus     Oct 18, 2012 in Business
McDonald's is suing the City of Milan for 24 million Euros in damages after the city authorities evicted the fast-food chain from a shopping arcade, a major tourist attraction, the Galleria Vittorio Emanuele II.
According to The Financial Times, McDonald's has been serving burgers and chips at the Galleria Vittorio Emanuele II, Milan's exquisite marble-floored 19th century shopping arcade, next to prestigious brands such as Vuitton, Prada and Gucci, for 20 years.
The Galleria outlet is McDonald's third-busiest in Italy, only after an outlet in Rome and another in Milan's Piazza Duomo, The Financial Times reports .
According to Reuters, a new Prada store will replace McDonald's following a public tender that McDonald's says was unfair.
Reuters reports that McDonald's marked the end of its presence at the Galleria by offering free burgers, fries and drinks in the last two hours of its operation. Paolo Mereghetti, head of communication at McDonald's in Italy, reportedly said: "We wanted to say goodbye to the Galleria with a smile."
But in spite of the closing gaiety, The Financial Times reports that McDonald's is suing the city of Milan that owns the Galleria for 24 million euros in damages for what it describes as an unfair public tender for the space.
McDonald's claims that the city arranged for the the restaurant to close by fixing a public tender with clauses that disqualified the restaurant. The Financial Times reports that one of the clauses asked for a "business showing excellence in innovation, technology and communications”.
According to McDonald's, this is the first time a business at the Galleria has not been granted a right of first refusal on a new rental contract.
Roberto Masi, chief executive of McDonald's in Italy, said,“We don't want to fight with the city, but we were kicked out unfairly.”
The city authorities, however, denied McDonald's allegations.
Mereghetti said that McDonald's would incur sales losses of about 6 million Euros as a result of the eviction. He assured, however, that "No jobs will be lost as a result."
According to Reuters, about 1,500 loyal Italian customers have posted messages on the Facebook page the company set up two weeks ago to commemorate closure of the Galleria outlet. Catia Fiorentino, a McDonald fan, wrote: "I will miss it because from now on I can no longer eat my favorite Miami fries admiring the spectacular Vittorio Emanuele arcade."
The Financial Times reports Rossana Commissari, wrote: “This is the McDonald’s where I ate on the first date with my boyfriend, now my fiancée, and where we eat every time we come to see the duomo. A true pity.”
More about Mcdonald's, Milan, 24 million euros, galleria, Eviction