Despite Greek Economy, Athens Cupcake Business Thrives

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Nicole Kotovos was searching for a way to start a new life when the idea struck her: She would go to her ancestral homeland of Greece and open an American-style bakery cafe. She would bring the cupcake fad to Athens.

What she didn't figure on was the historic downturn in the Greek economy.

The former New York TV producer arrived in 2008, just as the country's debt-mired economy was falling into a deep recession it still hasn't emerged from.

"The Greeks tell me, 'Oh, if only you had been here in the better times. You came at the worst time. What were you thinking?' " she says, sitting at a table at her shop, Hamptons Cupcakes, in an upscale neighborhood of northern Athens. "To this day, I hear, 'Thank God you have an American passport. You can just get up and leave. Why aren't you doing it?' "

Kotovos didn't leave, and today, at 37, she's just opened her third bakery. Her success is a reminder that some businesses can still survive and prosper, even in the midst of a terrible economy.

"The crisis had already started here, but I knew that coffee and cupcakes, with value for the money, still had a chance, even given the circumstances. Bakeries are generally recession-proof. I don't know how well we would have done if there wasn't a crisis, but given the crisis, we're doing OK, we're doing well," she says.

But success hasn't been easy, and Kotovos' experiences underscore just how tough Greece's notoriously bureaucratic business climate can be for startups.

As its name suggests, Hamptons Cupcakes looks very much like an American-style bakery. A glass case containing trays of multicolored cupcakes is the first thing customers see when they arrive. The menu is on a chalkboard, and cake plates are stacked on white wooden shelves. You can watch the baking behind a large window.

Late one recent afternoon, customers were crowded into the sunny courtyard, sipping Greek coffee and eating cupcakes.

"It's something fresh here in Greece. It's something tasty. If your coffee is just black, it tastes even better," says customer Chris Papadimas, a student.

Hamptons was the first cupcake cafe to open in Athens, although others have followed.

"I took a chance. I did some research on it. And I knew they loved their Greek pastries. But I also knew that the Greeks were open-minded," Kotovos says.

Kotovos had to train her employees how to bake American-style. She also found she needed to adjust the recipes she brought because of Greece's humid climate.

"It was almost a three-month process until we actually came out with a cupcake that could withstand the climate here. We change it a little bit in the summer. We keep it very cool inside, for obvious reasons," she says.

But learning how to do business in Greece was trickier than tweaking the recipes.

For example, Greece has its own unusual system of financing: As a business owner, she can write checks to suppliers or contractors and post-date them. The suppliers can't cash them right away, but they can use them as collateral for a bank loan.

That kind of financing has become much harder to get recently, as credit has dried up. Like other Greek businesses we've reported on, Hamptons Cupcakes has adapted to the fiscal crisis by importing much of what it uses in production, and paying cash for everything it buys now.

Kotovos has also had to get used to Greece's strict employment laws. Her workers have guaranteed wages and benefits, including four weeks of vacation. "Next life, I'm coming to Greece as an employee, and America as an employer," she says.

She was also surprised to learn that employees get an extra month's salary every Christmas and Easter as a kind of bonus. It was an expense she hadn't budgeted for, and she found herself having to scrape together the money to pay it at the last moment.

Kotovos doesn't really complain too much about regulations like that.

What does frustrate her is the way the rules change. One day the government demands a certain kind of permit; the next day, it wants something else. Because the rules can be so confusing, a lot of Greek businesses develop a kind of casual attitude toward the rules.

"For better or worse, they sort of figure out ways to do things legally, but with the least possible effort, is the best way I can say it, or the most diplomatic way I can say it," she says. "For example, there are many stores that operate without actually having full permits, which they eventually have to get, but they haven't been able to yet."

For all the struggles she has faced, Kotovos remains a big booster of Greece and its business community.

"It has so much potential, and I am a big believer that one day they'll do something to actually attract and have the businesses and the businessmen they deserve to have here. They definitely haven't reached it, and they're probably not even close, but I constantly have this positive thought that it will happen, and that's what I love about it."

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