Pizza chain Sbarro said to be readying second bankruptcy filing

By Nicel Jane Avellana

Mar 01, 2014 01:34 PM EST

Sources familiar with the matter told Bloomberg that Italian pizza chain Sbarro is getting ready to file for bankruptcy protection after subjecting a nine-month scrutiny of the business. According to the people, the filing could take place in the next few weeks and would enable the restaurant to revamp its operations as it deals with debt and declining demand. The sources spoke on the condition of anonymity since the matter is confidential, the report said.

This would be Sbarro's second foray into bankruptcy court in just three years. In April 2011, the pizza chain which was acquired by private equity firm MidOcean Partners in 2007, filed for bankruptcy protection under Chapter 11 as it sought to bring down its debt by $195 million, The New York Times The Dealbook reported on April 4, 2011.

Sbarro Spokesman Jonathan Dedmon would not confirm a possible bankruptcy when interviewed by Bloomberg. However, the pizza chain had unveiled plans earlier this month to shutter 155 stores in North America as part of its moves to simplify operations.

Dedmon insisted that Sbarro is still a robust brand. He told Bloomberg, "During the past nine months, our new management team and its advisers have been thoroughly evaluating our business. We are making significant progress. Sbarro continues to be a strong brand with a bright future."

Most of Sbarro's pizza restaurants can be found in malls which have suffered due to declining consumer spending. In order to deal with the slow growth in the US, the pizza chain brought the brand abroad where it now has over 800 stores. Last year, 81 Sbarro restaurants opened for business, Bloomberg reported.

In the 2011 report by The Dealbook, Sbarro cited the lessening foot traffic in malls together with the rising prices of pizza ingredients, such as cheese and flour, as contributors to the difficulties it faced then.

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