Plunging mall traffic is killing some restaurants and stores

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(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.
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  • Nuclear Mike

    Don’t worry…Downtown, Inc. will fix it all just like they are doing for Downtown Huntsville…goat cheese & all…

  • Emerald Smith

    Yeah I haven’t shopped in a mall in years. If I don’t go to Bridgestreet I go to stand alone stores. I haven’t stepped foot inside the Madison Square Mall, outside of eating at Buffalo Wild Wings one night, in probably about three years. People can’t afford to shop as much now as they could in the early thousands. A lot of people do not even have jobs in this area. People are also looking to spend money or higher quality items that will last longer. Those are hard to come by in a mall setting.

  • Aerhae Starza

    Bridge street has had impact on Madison square mall.I have herd it many times that people have said this,I never understood why one would build a outdoor mall right down the road from the biggest mall in north Alabama.So yea when you build two malls real close to each other there will be economic problems because we don’t have that kind of population to support those malls as well as the population does not have the jobs in this particular area.My opinion we are over built in Huntsville on highway 72 all the way through Madison.To be blunt its a traffic nightmare and it is counter productive in terms of service’s and commercial venue’s that are being offered to the public.It seems we are under the guise that if we don’t have some kind of store every so many miles then we are doing it wrong,this needs to stop.

    • LAC

      You build an outdoor mall right down the road from another mall because people will go there. Business are in business to make money not to look out for the welfare of nearby businesses. We cannot blame the businesses because its up to citizens. If we don’t shop at a place it won’t be open long.

    • Jim

      I dont think Bridge street crippled or poached Madison Squares customers. That mall was dead 10 yrs ago. The economny has changed and it has shifted out of malls to the big box outlets anyway. The theatre at Bridge Street is a good draw plus people can go somewhere and be outside when the weather is good. I thought it seemed kinda silly to build a mall that way, but it works. Overall malls are too expensive. I read the stories about companies going out of businees ie Shabarros due to high rent leases they signed years ago.. Maybee all those mall companies and I tell you there are just a few of them that manage most of the malls in America, need to think about reducing the rent on those tenants or otherwise they will go out of business and they will have no tenants at all. I own rental property and I have lowered the rent for a year at a time when people were having difficulities. Its better to get some rent than no rent at all. These mall operators will have to do that if they want to remain in business. But the overall problem is people just dont go to malls anymore with all the online shopping , big box stores etc..Malls are very expensive. The main reason I used to go to the malls was the Anchors but even they are having problems. Sears is sinking, JC Pennys is having problems…etc…I think its more of a trend toward shopping away from malls than what they do in the malls..Either way they need to be able to get prices lower or they will sink regardless…I have always thought it was smart to have ice skating rinks in them. We had some like that in Dallas and that attracted alot of people…

  • Speedracer

    I remeber going to the mall when I was 16 to hit the arcades. Those are few and far now. Mosf of the store in malls are aimed towards womens need anyway. One of the reasons I hate shopping for pants these days.

  • Bob

    Or, it might be that most people realize what total garbage fast food is and are now choosing not to eat at these places.

    • Nuclear Mike

      Correct…and the Mall prices of their “anchor” stores are just non-competative anymore…the open Mall of Bridgestreet witout the threaters would probaly just as deserted as Madison Square is now…and the thug gangs that were at Madison Square Mall more in the past caused many of us to just not ‘risk’ a mall visit…

  • Tim

    UH you think malls might be struggling because the economy sucks. I know I am more aware of what I spend my money because prices keep rising but my paycheck stays the same.

    • Cyndi

      @Tim. That is sooo true!! Everything except paychecks keep going up. You can’t afford to shop. I heard today that they were thinking about raising minimum wage to $10/hr. I bet yours and my paychecks would stay the exact same. Its disgusting. I hate what our country has turned in to!

  • Scott Frazer

    I haven’t lived in Huntsville since the late-1990’s and remember Madison Square as being a decent shopping venue, not great, but decent.

  • ariel

    most of the clothes at madison square are secondhand, i know cause i worked at Dillard’s there they let the employees wear them so i wouldnt waste your time at that mall it has nothing to do with who shops there just businesses have become dirty. they’ll sell you something at full price when its been worn by somebody else.

  • KB

    As far as the Food court goes, I won’t eat there. I rarely eat at restaurants anymore. When you get paid crappy wages you just don’t care and it shows in the cleanliness and service. I’ve heard too many people talk about getting sick after eating there.

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