Gloria Ayee
Staff Writer
Any owner of a pizzeria will tell you that the pizza market is highly competitive. According to recent reports, Sbarro’s outdated business model may well be putting the restaurant chain, which specializes in New-York style pizza, in a very difficult position.
Sbarro LLC filed for Chapter 11 protection in the U.S. Bankruptcy Court in Manhattan on Monday, March 10. This is the second time in three years that the pizza chain, which is headquartered in Melville, NY, has filed for bankruptcy.
In February 2014, Sbarro announced it would close 155 company-owned restaurants across North America. 800 units worldwide (200 of which are located in the United States), including franchised locations, would remain in business.
Sbarro first filed for Chapter 11 protection in April 2011, and emerged from bankruptcy in November of that year. The new filing comes a month after Standard & Poor’s Rating Services downgraded Sbarro’s credit rating (from CCC+ to CCC-). The February 2014 Standard & Poor’s report described Sbarro’s financial structure as “unsustainable.”
According to the bankruptcy filing, Sbarro has $100 million and $500 million of assets and liabilities. Approximately $140 million of Sbarro’s outstanding debt will be erased as a result of this bankruptcy filing.
Sbarro has released a statement saying that while the company “remains a strong and vibrant brand” it filed bankruptcy as a way to “implement a prepackaged reorganization plan,” which would allow it to restructure the business.
Sbarro is named after the Sbarro family. Gennaro and Carmela Sbarro, a married couple who immigrated to the United States from Naples, Italy, founded the pizza restaurant in 1956.
Sbarro can be found in many mall food courts across the United States. Patrons can only hope that this bankruptcy filing will be a move in the right direction for the company, and prevent more restaurant closings.
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