(Image Credit: Coolcaesar @ Wikimedia Commons via MGN Online)
(CBS News) - Shopping malls are slowly turning into ghost towns, and that’s taking a toll on the stores and restaurants inside of them.
Nowhere is this more apparent than in the mall food court. Several fast-food chains that were once a primary source of sustenance for bored teens are crumbling, unable to stay in business as shoppers spend their money elsewhere.
The latest victim is Sbarro, the pizza and pasta chain that was a staple at mall food courts. The company could file for Chapter 11 bankruptcy protection as early as next week, The Wall Street Journal reported late Wednesday
, citing sources familiar with the matter.
In mid-February, the company announced it would be closing 155 of its 400 North American stores, most of which are located in malls and airports. The company is buckling under $140 million in debt.
Also struggling is Hot Dog on a Stick, an employee-owned chain with locations primarily in the West and Midwest, which filed for Chapter 11 bankruptcy protection last month. The company says that expensive mall leases were the main reason its business is failing, according to news reports
The company “signed some very expensive leases during the booming economy of the mid-2000s,” said chief executive Dan Smith, according to The San Diego Union-Tribune
. “Most of these leases were written for 10 years, and those that are really hurting us were written at the top of the market, 2004-2007, and they’re really hurting us. The world has changed, and to be stuck paying the same rates has been painful.”
Mall retailers are also hurting. Wet Seal (WTSL
) reported dismal earnings last month, with net sales for the fourth quarter down nearly 23 percent from a year earlier. Chief executive John Goodman cited “ongoing softness in mall traffic” as one reason for the decline. Shares have plunged 28 percent from the start of the year.