Despite the boom seen in the fastfood business industry, Sbarro counts itself as one of the few who were unable to capitalize on the growth trend. According to a Forbes newsmagazine report, the fastfood restaurant chain has filed for Chapter 11 bankruptcy protection in less than three years the company had filed for the first time. The company also showed trouble brewing this year when it announced on February that it will be shuttering 155 of its 400 restaurants across North America. Forbes said that the bankruptcy news will not affect the the 600 stores owned by franchisees.
Restaurant consultant and president Michael Whiteman of Baum & Whiteman LLC in Brooklyn, New York said that the latest development at the pizza chain was inevitable. He told Reuters, "Sbarro has been stuck with an outdated business model. Its biggest shortcoming is that it sells food that has been sitting out for a while, and more people want food made to order. I don't know that it has a sustainable business over the longer term. The way to turn the company around in the short haul is to get out of money-losing leases and close stores, which it has been doing."
Founded by Italian immigrants Gennaro and Carmela Sbarro in 1956, Forbes said the company grew to a 799-store firm across 40 countries and employs over 2,700 people. Majority of its stores in the US are located in malls, where it has been observed that foot traffic and food court spending has slowed down.
In its court filing, Sbarro reported $175.4 million in assets and $165.2 million in liabilities, Reuters said. The pizza chain plans to shed $140 million of secured debt in the reorganization, and has tapped advisers, which include Moelis & Co, Loughlin Management and the law firm Kirkland & Ellis to help them with the process.
Chief Executive David Karam had said about the bankruptcy filing, "The board and senior management team are committed to ensuring Sbarro's future growth and success and today's filing is a necessary step."
The news agency said that Sbarro filed for bankruptcy protection in April less than three years ago and emerged the following November.
