Sbarro, Inc. Announces Results of Operations for the Quarter and Nine Months Ended September 28, 2008

Sbarro, Inc. announced today results of operations for the quarter and the nine months ended September 28, 2008. The Company's detailed results are included in its Quarterly Report on Form 10-Q, which was filed with the SEC today.

Third Quarter Financial Results

Revenues were $91.9 million for the quarter ended September 28, 2008 as compared to revenues of $91.0 million for the quarter ended September 30, 2007. The increase in revenues was generated by new Company-owned stores and royalties on new franchised stores opened in 2007 and 2008, and royalties generated from the 15.5% increase in comparable-unit sales growth in our International Franchise restaurants, partially offset by 1% decrease in Company-owned comparable-unit sales and lost royalties due to a 2% decrease in our Domestic Franchise comparable-unit sales.

Net loss for the quarter ended September 28, 2008 was $1.2 million as compared to a net income of $.5 million for the quarter ended September 30, 2007.

EBITDA, as calculated in accordance with the terms of the Company's bank credit agreement, was $11.6 million for the quarter ended September 28, 2008 as compared to $14.7 million for the quarter ended September 30, 2007. The decline in EBITDA is primarily a result of increased costs of product, in particular in the cost of cheese, flour and flour related commodity costs such as pasta as well as increased cost of labor, while comparable unit sales declined slightly.

The Company was in compliance with the covenants under its bank credit agreement for the quarter ended September 28, 2008.

Year to Date Financial Results

The Company has reported operating results and its financial position for all periods presented as of and prior to January 30, 2007 (prior to completion of the Merger) as those of the Predecessor Company and for all periods from and after January 31, 2007 the Merger date as those of the Successor Company. The Company's operating results for the nine months ended September 30, 2007 are presented as the "Combined" results of the Predecessor and Successor companies. The presentation of "Combined" results is not consistent with the requirements of GAAP, however, the Company's management believes that it is a meaningful way to present the results of operations for the nine months ended September 30, 2007.

Revenues were $260.5 million for the nine months ended September 28, 2008 as compared to revenues of $254.1 million for the combined nine months ended September 30, 2007. The increase in revenues was driven primarily by new Company-owned stores and royalties on new franchised stores opened in 2007 and 2008, and royalties generated from the 20.1% comparable-unit sales growth in our International Franchise restaurants, partially offset by 0.4% decrease in Company-owned comparable-unit sales and lost royalties due to a 1.2% decrease in Domestic Franchise comparable-unit sales.

Net loss for the nine months ended September 28, 2008 was $8.9 million as compared to a net loss of $35.1 million for the combined nine months ended September 30, 2007. Included in the net loss for the combined nine months ended September 30, 2007 was $31.4 million attributable to special event bonuses in connection with the Merger.

EBITDA, as calculated in accordance with the terms of the Company's bank credit agreement, was $25.4 million for the nine months ended September 28, 2008, as compared to $34.3 million for the combined nine months ended September 30, 2007. The decline in EBITDA was attributable to increased cost of products, in particular in the cost of cheese, flour and flour related commodity costs such as pasta, while comparable unit sales declined slightly.

Peter Beaudrault, Chairman of the Board, President and CEO of Sbarro, commented, "Our results for the quarter and year to date are indicative of the impact the financial crisis has had on consumer spending habits. In addition, commodity cost, particularly cheese and flour related costs have remained higher than last year." Mr. Beaudrault further commented, "While we have begun to see commodity costs decline somewhat in the current quarter, we remain vigilant as to consumer spending and continue to control both our operational and capital spending in this challenging economic environment."

MidOcean Partners' Acquisition of Sbarro

On January 31, 2007, MidOcean SBR Acquisition Corp., an indirect subsidiary of MidOcean SBR Holdings, LLC ("Holdings"), an affiliate of MidOcean Partners III, L.P., and certain of its affiliates ("MidOcean") merged with and into the Company (the "Merger") in exchange for consideration of $450 million in cash, subject to certain adjustments. As a result of the Merger, the Company is now an indirect wholly owned subsidiary of Holdings.

In addition, the former shareholders received a distribution of the cash on hand in excess of (i) $11 million, plus (ii) all amounts required to be paid in connection with various special event bonuses paid in connection with completion of the Merger.

In connection with the Merger, the Company transferred interests in certain non-core assets to a newly formed company owned by certain of our former shareholders. There was no additional consideration given for the transfer of these assets as they were treated as a dividend. The assets and related costs that we transferred (the "Withdrawn Assets") were:

-- the interests in Broadhollow Realty LLC. and Broadhollow Fitness Center LLC., which owned the corporate headquarters of the Company, the fitness center and the assets of the Sbarro Cafe located at the corporate headquarters,

-- a parcel of undeveloped real property located in East Northport, New York,

-- the interests in Boulder Creek Ventures, LLC and Boulder Creek Holdings, LLC, which own a 40% interest in a joint venture that operates 15 steakhouses under "Boulder Creek" and other names, and

-- the interest in Two Mex-SS, LLC, which owns a 50% interest in a joint venture that operates two tex-mex restaurants under the "Baja Grill" name.



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