According to Reuters, “Sbarro Inc, a pizza chain with nearly 1,000 restaurants in 30 countries, said it notified lenders of a default under a credit agreement and hired Rothschild Inc to help it explore strategic options.”

“The news prompted Standard & Poor’s on Thursday to lower Sbarro’s credit rating one notch to ‘CC,’ a low ‘junk’ grade, from ‘CCC-minus,’ with a negative outlook. S&P analyst Mariola Borysiak called the Melville, New York-based company’s capital structure ‘unsustainable. ’ Sbarro disclosed the default notice in a filing late Wednesday with the U.S. Securities and Exchange Commission. ”

“The restaurant industry was hurt in the U.S. economic downturn as many customers cut costs by dining more often at home. Customer traffic also suffered in malls, where many of Sbarro’s restaurants are located. ”