One claims it's the company's only

chance for survival.

>> Atari has filed for Chapter 11

bankruptcy protection. The 31-year-old

>> PWA presents the difference. Kodak is

filing for Chapter 11 bankruptcy

protection.

What's up, guys? My name is Jake and

welcome to the 37th episode of Bankrupt.

Starting in New York in the 1950s, the

Sabarro restaurant chain has grown to

become an icon. Primarily known for

their casual Italian bites and

substantial presence inside indoor

shopping malls. The brand was once a

powerhouse, employing tens of thousands

of people with a truly global presence

of well over 1,000 locations. But those

prosperous years of private family

ownership and growth would eventually

come to an end with the company

ultimately filing for bankruptcy twice.

So in this episode, let's find out what

happened to Sabarro. This video is

sponsored by ODU. Stick with me through

the whole video to hear more about them.

It all began in Brooklyn, New York in

the mid 1950s with a family who had just

immigrated from Naples, Italy. All while

raising three young boys, Jinaro and

Carmela Sabarro wanted to open up their

own Solomaria, which is essentially an

Italian gourmet grocery store. After the

two worked various jobs around the city

to save money, they would finally open

up their own store in 1959. With a wide

variety of handmade sandwiches, pasta

dishes, and cheesecake, the shop would

garner tremendous success, enough for

the family to expand even further. By

the 60s, they would open up another

three locations, one even on the island

of Manhattan. With four locations across

the area, the family began noticing a

trend with their customers. Instead of

picking up the food and leaving as

intended, many of them would opt to just

treat their Italian goods as a sort of

informal restaurant and finish it before

they left. It wasn't long before the

family began placing some tables and

chairs, all while leaning into the

casual Italian fair with the addition of

fresh lasagna and critically pizza.

Their grocery store had now turned in to

sort of restaurants. It was now the

1970s, and as the family continued to

open up new locations, now under their

casual restaurant concept, a new type of

development had been taking over the

American suburbs. Developers across the

nation have been opening up large indoor

shopping centers, an intended hub for

community gatherings and shopping, all

contained within an easily accessible

temperature controlled building. They

would prove to be a huge hit and with

many starting to develop their own food

court areas. In 1970, Sabarro would open

their first mall location inside the

brand new Kings Plaza Shopping Center in

South Brooklyn. They opened it as a

continuation of the Italian deli theme

with a menu that had also expanded to

include shaved ice and other quick

bites. Sabarro continued to evolve

through this time though with the family

incorporating the company and

introducing a new logo. This brand new

location and this brand new concept

proved to be a massive hit. By the mid1

1980s, the Sabarro family now had 97

locations grossing around $20 million a

year. These restaurants had expanded

well outside the borders of New York,

too. Popping up under the Sabarro

Italian Eery name in shopping malls as

far as Sarasota, Florida, and

Minneapolis to across the border in

Toronto's enormous eaten center. These

shopping mall locations were often

packed, too, serving up just the right

mixture of convenient Italian bites, all

for a very affordable price. The

development of just serving a single

pizza slice to customers proved to be a

huge hit for the average shopping mall

consumer. The Sabarro family certainly

wasn't done there, though. They foraw

the opening of another 36 locations as

well as the introduction of a new format

called Sabarro Cafe, which would first

trial in Time Square. With a total of

105 restaurants and very little debt on

the books, the company would go public

on the American Stock Exchange in 1985.

In doing so, the company would raise

around $8 million, which the family

would primarily use to pay down their

debt. What a concept. By this point, the

Suns had taken over the business. Mainly

Mario Sabaro, who was now serving as

CEO. Under his leadership, Sabaro's

presence continued to expand across

America, now opening locations in the

West and even Puerto Rico. Both Wall

Street and the family knew there was

enormous potential with the brand, which

through the 1980s continued to grow

exponentially. While the company used

their growing stock to fund further

expansion, they also opened the door to

franchises, something the family had

always avoided. However, with strict

quality control, Zabaros could only grow

even faster than before, reaching 318

locations by 1988. The sales followed

suit with nearly $150 million in gross

revenue and over $14 million in actual

profit. Very impressive for such a short

time. By 1990, the company would cross

the Atlantic, opening their first truly

intercontinental location in the suburbs

of London. The '90s also proved to be a

hugely successful decade for the

company. Not only would Sabarro continue

to grow, making partnerships with other

brands to expand their presence outside

of the shopping center, but they would

also open up in new countries to stay

competitive in the very fierce pizza and

restaurant market. They would also test

out other store concepts like a

moderately priced Italian restaurant, a

steakhouse, and a sit-down pizzeria. All

of which only saw lukewarm appeal and

failed to accumulate staying power. The

mainline Sabaro brand, however, most

certainly did. And through this era, the

company proved to be really a staple of

shopping center food courts. If you

wanted pizza at the mall, Sabara was the

place to go. With the warm glow of heat

lamps and the neon signs, the green,

white, and red colors became synonymous

with people's trips to the mall food

court. Their distinct pizza infused

scent permeated the area, drawing in

hungry shoppers. The company was a

restaurant institution, one which by the

late '9s totaled around 800 locations.

It was around this time when Mario

Sabaro, who was still acting as CEO,

wanted to regain full control over the

company. So, following a full buyout

worth around $389 million, the company

went private. Once again, now under the

full control of the Sabarro family, the

brand entered the new millennium under

quite an incredible ownership change. An

instance of a company growing through

public stock and investments, then being

brought back into privatization through

the original family that created it. It

was a pretty incredible story. Sabarro

was now earning hundreds of millions of

dollars, and once again, the chain

continued to grow, adding another 100

locations by 2001. However, management

acknowledged that their brand image had

gotten a little lost with all of this

expansion. So, in 2003, they hired a new

CEO that wasn't part of the family. A

big step for the future of the company.

However, challenges for them would only

mount as by 2004, the company posted

their largest sales drop ever. Not only

did revenues drop nearly three and a

half%, but Sabarro had actually posted a

net loss for the year in 2003, just two

years after their new CEO took the helm.

He was replaced by yet another new CEO.

Several of the Sabarro family members

had also left the company by this point,

and the corporate messaging was all

around the struggles of increased food

costs, mainly with cheese, as well as

competition and the war in Iraq.

Ultimately, the parts of the family that

did still control the company opted to

sell it. In November of 2006, it was

announced that the private equity firm

Mid Ocean Partners would be the buyer.

Unsurprisingly, Mid Ocean didn't have

enough capital to fully meet the $417

million price point. So, the firm took

out at least $28 million in debts to

purchase the brand. They then, of

course, attached that debt to the

company. But it's not like these new

owners didn't have a vision as they

wanted to bring the chain back into a

growth position. After their 1,000th

store opened in mid 2007, the company

publicly set a road map to grow their

locations to over 2,000 by 2011.

However, this was all being done while

the actual market potential didn't seem

to be there. Sabarro as a brand was

facing many challenges from increased

competition to changing consumer habits,

mainly with more options in the healthy

casual space. The brand just couldn't

compete very well in that market. And of

course, the 2008 recession certainly

didn't help. Consumer spending within

shopping malls had declined dramatically

and customers had cut down on outside

expenses like food at food courts. The

brand was quickly falling into a hole as

borrowing interest rates had

skyrocketed. In the first nine months of

2010, the company had lost nearly $30

million. Sabarro was quickly

accumulating hundreds of millions of

dollars worth of debt and approaching a

tipping point. On April 4th, 2011,

Sabarro had filed for Chapter 11

bankruptcy protection with over $350

million in debt. Much of that debt had

come from the private equity firm which

bought them just 5 years prior. When

asked about the situation, a restaurant

consultant described their situation

pretty bluntly when he told the Chicago

Tribune that quote, "This is not based

on any specific products, pizza, but

instead on how Sabarro ran their

business, executed leases, created

profitable items, and managed their

labor model. Sabarro is a stale and old

brand that has not taken any steps to

reignite their audiences and has not

competed on the same level as their

competitors. Sabarro for their part

indicated that they were going to find a

way through their bankruptcy and

following the closure of various

locations and the elimination of jobs at

their corporate headquarters. Sabarro

emerged from bankruptcy in November

2011. However, the company wasn't fully

out of trouble. Domestically, the

majority of their stores were still

found inside of indoor shopping malls,

and by this point, they were on a

downward trend. Less shoppers inside of

malls meant less potential customers to

eat at some bar. These locations also

limited them massively for atome

delivery, a huge part of the industry

for other pizza restaurants. The

company, however, did freshen up some of

their locations and made changes to

their menu, all in a hope to recapture

some of their customers. However, as

shopping malls turned into dead malls,

and as Sabarro struggled to keep up with

higher food, labor, and occupancy costs,

they were once again reaching a point

where they weren't going to be able to

make payments towards suppliers and

creditors. For the second time in less

than 3 years, on March 14th, 2014,

Sabarro filed for bankruptcy once again.

This Chapter 11 filing would see the

chain close even more locations, mostly

domestic ones, all while they were able

to shave off around half their debt and

streamline some operations. With a $35

million cash infusion from investors,

the brand once again emerged from

bankruptcy in June 2014. With this exit,

they now had new private equity owners,

which took majority stakes. Almost

immediately, the company went on a

mission to reinvent themselves. With a

new CEO in place, Sabarro introduced a

new corporate brand image with modern

aesthetics. A new logo was developed and

even a standalone test store in

Columbus, Ohio was opened. But Sabarro

was now a much smaller company, one

which had around 300 locations left

within America, over half of what they

had just a decade ago. Malls across the

country continued to shutter permanently

and Sabarro was a byproduct of their

decline. To combat this, the company

continued to revamp their existing

profitable locations, focus more on

pizza, and open even more stores outside

of malls. Aside from further

international expansion, where the

company actually saw good success

domestically, they focused more on their

online presence, making their products

available on delivery apps, and building

out a whole reward system. Over a decade

following their exit from bankruptcy,

well, the company actually seems to be

turning things around. In fact, Sabarro

has actually been opening up new stores

at a rather rapid pace. In just the last

few years, they have opened up over 200

locations. Many of these new openings

are overseas, though they would enter

new segments like casinos, military

bases, hospitals, and convenience

stores. At this point, over half of

Sabarro's now 700 or so stores are

located outside of the United States.

This makes them really more of an

international chain than an American

one. And I think that just goes to show

how much this company has changed over

the last few years. It's honestly almost

recognizable from where they started 70

years ago. The rather bland looking

modern stores, which now mainly focus on

pizza, are certainly a far cry from the

vibrant Italian grocery store that it

started as. You can tell which version

of the company is owned by private

equity and which was owned by a private

family. A family which started with a

dream and grew it with tremendous

vision. Sabarro became an American

casual institution. a weekly ritual for

many mallgoers and their enormous

presence across the country turned them

into an iconic brand. However, by the

2000s, it all began to fall apart. With

rising costs affecting their strong, low

price points, and with the shopping

institutions they had heavily relied on

all on a sharp decline, it was beginning

to become very hard to keep the brand

afloat. Forcing a company that is so

locked into the exact formula that made

it successful to change and adapt with a

whole new way of doing things. Well,

it's just really hard. Mix in a

recession and new corporate owners who

themselves saddled the company with

hundreds of millions of dollars worth of

debt. Then, yeah, I mean, it's really no

surprise that the company fell so

quickly. Their two subsequent

bankruptcies were both a mixture of poor

management and extremely unfortunate

positioning in the marketplace. While

today the company does seem to be on the

rise once again, it's certainly not

without its own challenges. Perhaps the

biggest elephant in the room for Sabarro

today is just the quality perception of

their domestic stores. Frankly, it's not

hard to find people with a poor view of

their food. I mean, just look at the

comments of any of their bland corporate

feeling posts or just check the Google

reviews. It's hard to find a location

with over 3.5 stars. I mean, the brand

seems to be relying more on convenience

than it does actual food quality,

especially when that pizza slice under a

heat lamp all day runs you around $6.

But at the same time, clearly the

company is seeing success with more

niche locations abroad. In 2025 alone,

they had opened over a 100 new

locations, mainly overseas. So that

still means the corporate direction for

the brand seems positive. While they are

now a private company and as a result we

don't know the exact state of their

financial health. I think it's safe to

say that this iconic brand, however

different and now may be, may have

actually successfully navigated through

buyouts, recessions, and two

bankruptcies. Perhaps the slice of the

market they now have will only grow

bigger. Obviously, running a business of

any size is hard. Just look at any video

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the description below. Anyway, guys, my

name is Jake and thank you very much for

watching.

Heat. Hey, Heat.