Sbarro Continues Growth
Sbarro, one of America’s favorite mall retailers, is still growing at home and internationally, after 50 years in business.
Randall Shearin

Sbarro plans on opening more corporate stores. The company estimates it is only in 25 percent of the available mall opportunities in the U.S.

Sbarro is a familiar name to everyone in the mall business and all who shop at malls. The company’s restaurants are located in most of the nation’s top malls and at well known centers internationally. It is one of the few companies that has grown with the mall business — and one that is still going strong to this day. Sbarro celebrated its 50th year in business in 2006.

Shopping Center Business recently met with Anthony Missano, president of business development for Sbarro at the firm’s headquarters in Melville, New York.

Today, Sbarro has over 1,000 restaurants in over 34 countries with system-wide sales of approximately $700 million. The company is the largest pizza-based mall concept in the world. Sbarro is the fifth largest pizza concept and the Number 1 choice among consumers for quick service Italian food. The company has close to 200 international locations and more than 500 locations scheduled to open over the next few years worldwide.

New Growth

Sbarro has been operating quietly over the last 6 years. Since 1999, when the company was taken private, it has kept to itself. The privately held company continued its franchise growth, but did not open many corporate stores. In 2006, the company’s founders decided to sell to MidOcean Partners. The deal closed in January 2007.

MidOcean, a private equity fund, wants Sbarro to grow. MidOcean has owned a variety of companies, such as Jenny Craig, one of the largest weight-loss management companies in the world, and Palace Entertainment, an operator of family entertainment centers and water parks. Missano and the entire management team feel that Mid-Ocean is a great fit for the Sbarro brand and have been pleased with the relationship.

Sbarro celebrated its 50th year in business in 2006.

Leading the charge today at Sbarro is Peter Beaudrault, who serves as chairman, CEO and president. Beaudrault joined the company in January 2004. He was previously president of Hard Rock.

“MidOcean is highly impressed with the current management team that Sbarro has in place,” says Missano. “There are a lot of good people at the corporate headquarters and in our restaurants, especially, the more than 60 field management personnel we have at all levels, many of whom have worked with Pete Beaudrault in the past.”

In addition to Beaudrault and Missano, rounding out the executive team is Anthony Puglisi, CFO, Stuart Steinberg, the company’s general counsel, John Brisco, president of international franchising, and Randy Clifton, president of domestic franchising.

Real Estate Growth

One big change that MidOcean has provided is the go-ahead for new corporate owned and operated locations. The company has been aggressively opening corporate store locations since fall 2006. Currently, about half of Sbarro’s systemwide stores are corporate owned, while half are franchise owned.

In the U.S., Sbarro units are in 48 states. Sbarro has been selecting locations at lifestyle centers, especially those with food courts, for potential new sites. The company’s food court units range between 500 and 1,000 square feet. Its inline stores run between 2,200 and 3,000 square feet.

“The square footage we take really depends on the volume that we expect to do and what’s available at a particular center,” says Missano. “We’re flexible to manage our model and fit the space that landlords present.”

While it may seem like Sbarro is everywhere, Missano feels that there is room for growth. In fact, he says, though Sbarro is the largest mall-focused pizza operator, it is in less than 25 percent of the available mall opportunities in the U.S. Sbarro works with Pennsylvania-based David Coleman & Associates for all of its corporate store mall leasing.

“Our reach is strong and we are everywhere in the U.S. and in over 34 countries internationally,” says Missano. “So, when the opportunity shows up in any corner of the world, we have people on the ground running our operations, as well as our franchisees to explore and manage any opportunity. From a market share standpoint, we have tremendous growth capability,” says Missano.

In addition to malls and lifestyle centers, Sbarro has been growing in alternative locations as well. It has opened restaurants in casinos, airports, travel plazas, university campuses, theme parks, office buildings and hospitals, just to name a few. The company has relationships with many large food service operators who franchise Sbarro units globally. Sbarro currently is expanding casino opportunities with the assistance of Garry Remington Consulting.

“We value our relationship with developers, landlords, and franchisees,” says Missano. “We know we have demonstrated that we are a company that is committed to the malls. We continue to go hand-in-hand with mall developers and their growth needs. Our first mall location, King’s Plaza in Brooklyn, which opened in 1967, is still open today and is one of our highest performing mall locations.”

Once a corporate location is signed, Sbarro has an exclusive arrangement with Syracuse, New York-based AnCor as its construction contractor.

Sbarro’s stores are incredibly strong performers, too. The company’s same store sales are up in excess of 5 percent for the last 3 years. Sbarro units have some of the highest sales per square foot in the mall food category. The company keeps turnover at a minimum at the management level by having one of the best management bonus programs.

International Expansion

Internationally, Sbarro has grown with food service operators by partnering with them and giving them franchise rights for the Sbarro restaurants, and in some cases, joint venture agreements with Sbarro. The company looks for experienced food service operators who already successfully grow restaurants in their countries. The franchisee must have an infrastructure in place to handle the expansion and a track record of success.

“They also must have the ability to own the market and expand our concept to the entire province or country,” says Missano. “We align ourselves with up-quality, food service operators who have demonstrated years of experience in growing other chains.”

Sbarro has been active internationally for many years. Pictured is a unit in Moscow.

Sbarro entered Russia in 1997 with an agreement with a master franchisee there. Today, there are close to 100 Sbarro units in Russia. The units started in cities like Moscow and St. Petersburg, and now the franchise group has expanded the chain to the Baltics and the Ukraine. Sbarro has recently entered Turkey and Greece. About 35 percent of the company’s international locations are in malls. The balance is in main street locations and airports.

In addition to new stores, Sbarro is also growing its sales by offering its famous sauces for sale. The company grows its own tomatoes in California and has them cooked with a proprietary recipe and packed specifically for the stores. Now, the sauces are being packaged in smaller quantities for retail sale.

“We are continually evaluating our ingredients, from our sauces and cheeses to paper products,” says Missano. “We also evaluate how the products are prepared and displayed. Good ingredients are great, but it is the handling and the presentation that Sbarro does the best, which carries out the sale.”

Throughout the years, Sbarro has opened a number of restaurant concepts. It successfully opened family-style steak houses, casual Italian eateries and freestanding Italian restaurant locations. MidOcean and Sbarro management decided to hold on to the original concept of Sbarro QSR along with Mama Sbarro and Carmela’s, which are fast casual Italian concepts.

“Sbarro has strong brand recognition,” says Missano. “Our selection of entrees, pastas, salads and pizzas are very well received.“

50 Years Of Providing Quality

Since 1956, Sbarro has prided itself on providing good food to its customers. No matter how much the company grows, quality is consistent and it consistently rates as a top choice for consumers.

“To have a brand that’s been around for 50 years and still going strong is amazing and a testament to our quality food and operations,” says Missano. “Very few of the QSRs out there are 50 years old. It is a long time for a QSR concept to be in business and still have such strong appeal across all age groups worldwide. Even after 50 years, we’re poised for real growth.”

Missano has been at Sbarro for most of the company’s existence. He began his career with the company in August 1975, at the grand opening of Sbarro’s sixth location.

“That summer job became a 30-year rewarding career with Sbarro,” he says. “I have had the opportunity to watch a brand grow and watch the mall industry grow.”

Missano remembers when the company opened its first new location outside of New York, in Woodbridge, New Jersey, and thinking, “We’re going all the way to New Jersey!” Today, as Sbarro opens units in India, that thought is still with him.


©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.