It may be boom times for some restaurant chains, like stars Chipotle and Panera Bread, but don't count Sbarro among those benefiting from the fast casual trend.
The fast food pizza chain filed for Chapter 11 bankruptcy protection for the second time in less than three years after it tried and failed to boost sales by revamping its menu and shuttering its worst-performing restaurants. In February, Sbarro said it would close 155 out of the 400 restaurants it owns in North America, though it still has more than 800 locations abroad and about 600 owned by franchisees (the latter will not be affected by the bankruptcy).
In its 2011 bankruptcy, the company slashed 80% of its $400 million debt load. This time, it wants to cut another $140 million worth of debt. While Sbarro is inviting other parties to submit offers to buy the company, its main lenders voted to support a "pre-packaged" plan to exchange the debt for control of a reorganized Sbarro.
“The agreement among the company’s lenders is an indication of the support and confidence they have in the growth strategies developed by the new management team over the past nine months. The Board and Senior Management Team are committed to ensuring Sbarro’s future growth and success and today’s filing is a necessary step to achieve those goals,” Sbarro CEO David Karam said in a statement.
Sbarro's US restaurants are mainly located in malls, where foot traffic has slowed and food court spending is down. It also failed to adjust to the consumer trend toward slightly more upscale fare.
The Melville, NY-based company was founded in Brooklyn in 1956 by Italian immigrants Gennaro and Carmela Sbarro.
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