Sbarro Pizza, a chain based out of New York, filed for bankruptcy protection for the second time since 2011. After announcing that they plan to close more than 150 locations in North America last month, the company filed a Chapter 11 petition today in the U.S. Bankruptcy Court in Manhattan.
Sbarro was started as a family grocery store in 1956 and eventually expanded to include more than 800 locations throughout the world. After business began dwindling, Sbarro filed for bankruptcy protection three years ago and listed assets of $471 million and debts of $486.6 million at the time. The company was able to exit bankruptcy later that year, but after hiring a new CEO and opening more restaurants overseas, Sbarro still hasn’t been able to keep up with its competitors.
During the Chapter 11 petition filed today, the company listed assets of $175.4 million and debts of $165.2 million. Part of the plan for exiting bankruptcy this time around is to eliminate $140 million in debt, and the company hopes to have a firm plan in place by late April.
“The agreement among the company’s lenders is an indication of the support and confidence they have in the growth strategies developed by the new management team over the past nine months,” Chairman and Chief Executive Officer David Karam said in a statement.
Even if Sbarro is able to exit bankruptcy again, will they be able to adapt to the business model that many restaurants such as Chipotle and McAlister’s find success with? These restaurants are able to provide a higher quality fast food/casual dining experience, something many consumers are leaning towards these days.
“Sbarro has been stuck with an outdated business model,” said restaurant consultant Michael Whiteman. “Its biggest shortcoming is that it sells food that has been sitting out for a while, and more people want food made to order.”
Hopefully for Sbarro Pizza fans, the company will be able to come up with a good plan this time around, which should include working on their social media presence. Judging from the company’s profiles on social websites Twitter and Facebook, both of which are severely lacking in followers compared to similar businesses, this could certainly be an outlet to draw in more business for the failing chain.
Image via Twitter