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Tag: Sbarro Chapter 11

  • Sbarro Out of Bankruptcy, Moving its Headquarters

    Pizza restaurant chain Sbarro this week announced that it has officially exited bankruptcy. According to a New York Times report, the company’s reorganization plan was approved all the way back on May 19. That plan took effect for the company starting Monday, July 2.

    In addition to the bankruptcy update, Sbarro also this week announced that it will be moving its national headquarters. The company’s current New York City-based headquarters will soon be relocated to Columbus, Ohio. The company estimates that the move should be complete by sometime in October.

    Sbarro stated that it expects the move to reduce operation expenses. Around 40 employees who work in the company’s New York headquarters will be laid off, but the company emphasized that its other employees across the U.S. shouldn’t be affected. According to the Times, Sbarro currently has around 2,700 employees in U.S. restaurants.

    Sbarro’s Columbus move also puts company leadership closer to its new Pizza Cucinova restaurant business. With two locations in Columbus and one soon to open in Cincinnati, Pizza Cucinova serves pizza with more of a specialty flair than Sbarro’s pizza. Pizza Cucinova is also being expanded through stand alone locations, rather than mall locations.

    Sbarro filed for bankruptcy earlier this year, the company’s second bankruptcy filing in just three years. This latest bankruptcy filing came just as the restaurant announced plans to close 155 of its restaurants in North America – nearly 40% of the company’s total number of restaurants, not including franchise locations.

    At the time of the filing, Sbarro’s CFO commented that reduced mall traffic could be to blame for the company’s falling revenue, along with an inflated budget. As with many businesses that use malls as primary retail locations, Sbarro has been hit by Americans’ quickly-waning interest in mall shopping. As internet retailers have begun competing with physical retailers, smaller malls across the country built during the mall boom of the 80s and 90s have begun to shut down.

    Image via Facebook/Sbarro

  • Sbarro Pizza Chain Files for Bankruptcy Again

    Pizza chain Sbarro LLC filed for bankruptcy protection Monday for the second time in less than three years and less than three weeks after being forced to close more than 40 percent of its locations.

    The Melville, NY based restaurant chain filed after struggling with excess debt and too few customers in malls in which many of its restaurants are located.

    Sbarro and more than 30 affiliates filed for Chapter 11 from creditors with the U.S. Bankruptcy Court in Manhattan.  According to court papers, the company has between $100 million and $500 million in both assets and liabilities.

    The company agreed to a pre-packaged plan upon filing, in which it had agreed to the reorganization of the company with creditors who own 98 percent of the company’s debt. The plan could help Sbarro to cut its debt load by more than 80 percent. The company will invite other buyers to make offers and has also secured $20 million in new financing.

    In February, Sbarro announced it planned to close 155 of roughly 400 restaurants the company owns across the North America to cut costs, effective immediately. Following the closure, the company will be leftwith 220 U.S. locations and more than 600 other locations owned by franchise operators in 40 different countries.

    After restaurant closings, the restaurant is left with more than 2,700 employees and said the 582 restaurants owned by franchisees were unaffected by the filing.

    Sbarro’s Chief Financial Officer Carolyn Spatafora cited “an unprecedented decline in mall traffic” and an “unsustainable” imbalanced budget that needed restructuring, which included the restaurant closings, as reasons in the court 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,” Chief Executive David Karam said.

    Karam joined Sbarro last March from the hamburger chain Wendy’s Co (WEN.O), where he was a president.

    Sbarro previously filed for bankruptcy protection in April 2011, and emerged from Chapter 11 the following November.

    Image via Wikimedia Commons