Sbarro filing for Chapter 11
April 5, 2011
by Eric Schroeder
MELVILLE, N.Y. — Sbarro, Inc., a quick-service restaurant concept with more than 1,000 restaurants in more than 40 countries, said it is filing for Chapter 11 bankruptcy protection as it works to restructure. The company said it has reached agreement with all of its second-lien secured lenders and approximately 70% of its senior noteholders on the terms of a reorganization that would eliminate about $200 million of debt.
“We believe this plan represents the best opportunity for Sbarro to clear a path for future growth by restructuring its debt in an effective and timely manner,” said Nicholas McGrane, interim president and chief executive officer. “We are a strong company with one of the most recognizable restaurant brands in the world.”
In its bankruptcy filing the company cited increasing costs for cheese and flour, as well as cost-cutting measures to combat commodity inflation and maintain earnings as factors hurting the company’s business.
Founded in 1956 as an Italian grocery store in Brooklyn, N.Y., Sbarro became a neighborhood favorite for its fresh food and authentic Italian fare, including homemade mozzarella, imported cheese, and sausage and salami. In 1967, Sbarro opened its first mall-based restaurant in Brooklyn’s Kings Plaza Shopping Center, and since 1967, the King’s Plaza business model has been replicated more than 1,000 times. MidOcean Partners, a private equity firm with offices in New York and London, acquired Sbarro in early 2007.