US pizza chain Sbarro Monday filed for bankruptcy protection for the second time in three years as a slowdown in mall traffic weighs on sales at its fast food restaurants.
The restauranteur requested protection under Chapter 11 while it reorganizes its finances, according to a filing in US bankruptcy court in New York.
The restructuring will affect about $140 million in Sbarro debt, according to report by rating agency Fitch.
Fitch also discussed a possible bankruptcy at Quizno’s, another medium-sized restaurant chain.
The Sbarro and Quizno’s troubles are “a warning sign of financial distress” confronting many brands in the restaurant industry, Fitch said.
“We do not view them as portending a widespread increase in bankruptcies of US restaurants, but a reflection of difficulties faced by brands that have lost their competitive position and relevancy with consumers.”
Both chains have suffered the growth of competitors like Subway, Little Caesars and Papa John’s. In Sbarro’s case, Fitch said the 68-year-old chain has also lost out from consumers moving away from shopping malls.
Sbarro last month said it was cutting 155 restaurants in North America to reduce costs.
Sbarro’s 2011 bankruptcy resulted in an agreement with creditors to trim its debt from $368 million to $130 million.
[Pizza image via Shutterstock]