The Sbarro pizza restaurant chain filed for bankruptcy court protection Monday as it struggled to stay afloat with an estimated $140 million in outstanding debt. This is the second time the fast-food chain has gone bankrupt in less than three years.
Sbarro has been unsuccessful in its efforts to cut debt and increase sales since its first filing in 2011. Earlier this year, the company announced it was closing up to 155 stores, which make up 40 percent of its U.S. locations, and will shutter 50 more before year end. Sbarro blamed a decline in mall traffic and increasing competition from other fast casual eateries for the decline.
In Monday's announcement, the chain said the bankruptcy filing is a pre-packaged plan, meaning it has already agreed on a reorganization plan with creditors that hold 98 percent of the company's debt. The bankruptcy filing was held at U.S. Bankruptcy Court in Manhattan.
Sbarro is confident that its management team can re-form the business and is planning to make a turnaround by May. After its last bankruptcy filing in April 2011, the chain was back on its feet by November.
The Melville, N.Y.-based chain has roughly 800 restaurants, including franchised locations, open worldwide, including 220 in the U.S. Sbarro said the bankruptcy does not affect the 582 restaurants owned by franchisees.
-See this Reuters article
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