Sbarro Pizza Could File for Bankruptcy Within a Week
According to the Wall Street Journal, Sbarro has entered talks with creditors to help deal with the $365 million in debt the company has accrued. That's quite a bit of debt, and it certainly shows what the environment in the business world is at this point. It also shows that the company might still have a future if it is able to get through the bankruptcy proceedings.
This is a company that was financed by Bank of America Corp and MidOcean Partners, which bought the company in 2007 through a $400 million buyout. It seems that this investment hasn't turned out to be as profitable as any of the investors had hoped, and now a serious effort will need to be undertaken in order to save the restaurant chain.
It looks like the Chapter 11 filing could come as soon as Monday, April 4, in New York, and it will be the next major step in trying to get this company back into the black. It certainly throws up a number of red flags for future investors, though, especially with how much debt the owners who took over in 2007 have racked up in just the last three-plus years.
In the end, this could be one of those business problems that doesn't affect the customers coming up to the cash registers. If those in charge of the company are intent on saving jobs and keeping the restaurants open, then that is exactly what is going to happen. If, however, the intent becomes to cut costs anyway possible, then there could definitely be some restaurants closed and some people losing their source of income.
It's worth noting that most people know of Sbarro as a restaurant chain that is often found in big malls. It is really a niche type product in many areas of the country, and there are some communities that might find the cost of eating there quite prohibitive. With a slice of pizza approaching $4 and a drink set at about $2 more, it isn't an inexpensive prospect for a family to stop in for some lunch while they are visiting the mall. Maybe that is something that the company should also try to address.
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Published by Ryan Christopher DeVault
Born in Seattle, Washington, I am a 31 year old college graduate working in the field of Education and Research. I am also a professional freelance writer and news content provider. I can be reached at... View profile
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1 Comments
Post a CommentI can get a piece of pizza for $1.50 and a soda fro $1.00 at the local pizza place -- pricing is really important, but it costs big bucks to has a storefront in any mall. So another one bitse the (pizza) dust. Good reporting.