To Celebrate The Bull Market Anniversary, Sbarro Files Second Bankruptcy In Three Years

Zero Hedge ^ | 03/09/2014 | Tyler Durden

[SeekAndFind]

People apparently don't eat pizza when it is snowing... Or during an economic recovery... And certainly not when celebrating the market's all time high 5 year bull "market" anniversary.

That is the conclusion one can derive from the just filed Sbarro Chapter 11 bankruptcy filing, which just happens to be the company's second in three years after it did the same in April 2011. The filing itself, which lists assets and liabilities between $100 and $500 million, is not surprising following on the heels of the announcement last month, when Sbarro said it would close 155 of 400 North American restaurants to cut costs. The reason for the Chapter 22 as it is known in restructuring circles: too much debt (so... debt isn't wealth?) and declining customer traffic, which like in the McDonalds' case has nothing to do with a cash strapped US consumer, but the nagging fear, which came true in January, that it would snow during the winter. Oh, and there is also no inflation, even though as Moody's warned in January, Sbarros was striggling with "high food, labor and occupancy costs."

But fear not: your favorite neighborhood Sbarro outlet will likely not be shutting down - a typical misunderstanding when bankruptcy is involved - as a $20 million DIP loan has already been arranged according to Bloomberg which will fund ongoing operations, and after $140 million in debt is eliminated, along with the existing equity of course, the company will return to operating its stores, albeit under new equity ownership.

Finally, none of the 600 or so worldwide franchises will be affected.

[ncfool]

Nobody eats this crap anyway unless at an airport. Too many calories and poor quality food.

[SeekAndFind]

If nobody eats their food, how did they survive this long? ( They’ve been in existence since 1970 ).

[SeekAndFind]

[Alex Murphy]

People apparently don't eat pizza when it is snowing... Or during an economic recovery...

Or when the mall, that hosts the food court that hosts your restaurant, just lost their third anchor store due to the economic "recovery".

If people aren't going to malls, they aren't going to order mall food.

[rhinohunter]

Haven’t seen an Sbarro since last time I was in a shopping mall food court — and I can’t remember the last time I was inside a shopping mall.
Hmmm .... Could it be that the changes in my habits are reflective of changes in America’s habits?

[Choose Ye This Day]

They need to change their business model and get out of the malls. I have spent a total of 25 minutes in shopping malls since 1999. I don’t go there for pizza.

[Grampa Dave]

The responses below would be probably be the same as an expensive series of focus groups on why SBarro is and has been having problems for over a decade.

The Mall business model and in particular food outlets in the malls are similar to the buggy whip business after the first Americans bought cars and drove them home.

To SeekAndFind

Haven’t seen an Sbarro since last time I was in a shopping mall food court — and I can’t remember the last time I was inside a shopping mall.
Hmmm .... Could it be that the changes in my habits are reflective of changes in America’s habits?

by rhinohunter (Freepers aren’t booing — they’re shouting “Cruuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuz”)

To SeekAndFind

They need to change their business model and get out of the malls. I have spent a total of 25 minutes in shopping malls since 1999. I don’t go there for pizza.

[nascarnation]

Wiki:

In early 2007, Sbarro was acquired by MidOcean Partners, a private equity firm with offices in New York and London

Debt kills. Even in a low interest rate environment.

[nascarnation]

I think the long range future of most malls is turning them into Section 8 housing.

So if Sbarro takes EBT, they’ll be prospering.

[Dilbert San Diego]

Somewhat off topic, but, I spend as little time in shopping malls as possible.

The malls, in, recent years, have decided to pipe in annoying rock and roll, even rap sounding music. And to see all the baby mamas, tattoos, people with pants so low, bothboth guys and girls, who bend over and you see the great divide, well, clearly mall management have decided that they don’t want someone like me as a customer. The whole atmosphere created is catering to certain types of people. And driving away certain other types of people.

[nascarnation]

Pretty much agree with your assessment. Many of the mall locations built in the 60s/70s are now lower income areas as wealth has migrated farther out or downtown.