Operates Cafeteria-Style Italian Restaurants : Analysts Savor Sbarro’s Growth

From Newsday

“Thank God,” Joe Sbarro said the other day, leaning back in an upholstered chair in his comfortable, fourth-floor office in this Long Island town. “We’ve always been able to carve out a good living.”

A deeply religious man, Sbarro frequently invokes the Creator’s name when he discusses his lifelong love affair with his family’s business, Sbarro Inc., a multimillion-dollar cafeteria-style Italian restaurant chain that began trading on the American Stock Exchange in May.

It was offered to the public at $10.375 a share and now is selling at $12.75.

That the business grew from a small delicatessen in Brooklyn 30 years ago to 67 company-owned and 52 franchised eateries in shopping malls in 31 states, Canada and Puerto Rico is due to two things, Sbarro says: hard work and God’s will.


Joe Sbarro, his two brothers and their recently widowed mother have not forgotten their beginnings.

Big Italian Family

“Yes, we’re a big Italian family,” said Sbarro, 45, whose easygoing manner contrasts with the company’s aggressive business style. “We still get together often.

“It’s a big feast every time we get together. Yes, we go to church every Sunday. We’re very religious.”

And very busy. Even by the fast-paced standards of the billion-dollar American fast-food industry, the Sbarro family is regarded by Wall Street securities analysts as exceptionally hard-driving.

Michael J. Esposito, a restaurant analyst at Oppenheimer & Co. in New York, said that, although the company has only recently gone public, early projections are that Sbarro’s growth will range between 20% and 25% a year for at least the next three years.

Revenue was $20 million last year, up from $4.2 million in 1981. Earnings last year were 67 cents a share, compared to 11 cents a share in 1981.


The company employs about 1,000 workers full and part time, and managers are given 15% merit bonuses based on their on-the-job performance as part of an effort to keep key employees.

“We’re very aggressive people,” Sbarro said. “We know where we’d like to be. We’ve always been that way. We don’t stay still.”

It was that way when Gennaro Sbarro, his wife, Carmela, and their three sons came to New York from Naples, Italy, in 1955 and opened a deli that rarely closed.

“When we started, nobody took a salary,” Sbarro said. “Everything went into one pot. The deli was open seven days a week, 16 to 18 hours a day. We’d go home Sunday afternoons for two or three hours. We’d come back and people would be waiting on line.”

In 1961, the first company-owned restaurant opened at Kings Plaza Shopping Mall in Brooklyn.

The work schedule for the Sbarro brothers has not changed much since the old days, but they now spend much of their time at their corporate headquarters.

Erwin Protter, Sbarro’s director of marketing, said that the company decided to go public to raise cash in hopes of opening 18 to 20 more restaurants by year-end, including 11 in September.

New locations for the restaurants will range from California to Washington to Florida and Wisconsin.

When the company went public, brother Mario became president and chairman, Anthony is vice president of development, Joe is vice president of operations and Carmela Sbarro is a vice president who, the company prospectus says, “shall devote a substantial portion of her time to recipe and product development.”

$500,000 Average Gross

Sbarro has 66 sit-down restaurants that, on the average, gross $500,000 a year. The remaining restaurants, in what are known as shopping mall “food courts,” share seats with other fast-food establishments and gross about $333,000 a year each.

Service is fast and meals are priced from $2.99 for spaghetti and tomato sauce to $4.50 for spaghetti with chicken parmigiana.

A slice of pizza, which sells for $1.10 plain to $1.69 “fully dressed,” accounts for about half of an outlet’s sales.

If he were starting all over again, Joe Sbarro said, there is one thing he would do differently: Start the chain stores quicker.

“Sbarro’s dream is to be another McDonald’s,” he said. “I hope we all don’t get too old to see that.”