Sbarro Chief Executive Nicholas McGrane had this to say about his eatery's bankruptcy filing on Monday: "Sbarro is a strong company with an unsustainable balance sheet."

This makes about as much sense as boasting, "It's a nice house with too big a mortgage," or "I'm in good shape. I just need to lose 350 pounds."

McGrane might as well have added, "It's a great pizza with a lousy crust."

The founding Sbarro family sold the chain in 2007, months before the economy crashed. Private equity firm MidOcean Partners bought it for $417 million, financed in part with $150 million worth of junk-food bonds at 10.375% interest.

This makes the Sbarro family look smart. And the MidOcean people, stupid.

"Anyone who has been to shopping malls in the last 30 years knows the Sbarro name," McGrane enthused in late 2006 as MidOcean announced its agreement to acquire Sbarro. "The name means something to consumers."

Yes, I believe "Sbarro" is an Italian word for "plastic tray."

The MidOcean folks could not have known they were buying the restaurant chain at the top of the market, that inflation would rack up cheese and flour costs, or that mall traffic would trickle to what could scarcely be called traffic at all.

They likely were too busy focusing on how they could load up the company with debt and flip it in a future initial public stock offering. But you'd think they could have done some market research before agreeing to pay 10.375% interest on millions of dollars worth of pizza.

I queried my Facebook friends on Monday for their quick reviews on Sbarro:

"Mediocre fast-food Italian," wrote Jeff Carlton, which was the most positive review I got.

"Big slice of yuk!" wrote Liz Thompson.

"Isn't Sbarro only located in food courts at the malls? ...Never have I chosen that over whatever Chinese place is most likely right next door!" wrote Jan Brown.

"I love the episode of 'The Office' where Michael Scott goes to NYC and points out the Sbarro, and says, "My favorite New York pizza place. I'm going to go get me a New York slice!'," wrote Dave Maney.

Yes, Sbarro is based in Melville, N.Y. It was founded as an Italian grocery store in Brooklyn in 1956 and now has 1,045 locations in 42 different countries. Yes, this is what passes for New York pizza outside of the Big Apple.

It's not bad. It's not good. It's not worth the average $8.18 per customer transaction in an extended period of high unemployment.

"It's the pizza of last resort," said Adam Hanft, chief executive of New York City-based marketing and branding firm, Hanft Projects.

"How stupid and greedy is private equity to think they could squeeze every penny out of the chain, give crap to consumers, and then hold [the company] long enough to flip and take public?

"It's kind of despicable," Hanft said. "But things went against them."

Hanft said Sbarro should have done what Domino's Pizza Inc. (DPZ) did: Run commercials admitting its pizza is bad and vowing to make it better. To back up its promises, Domino's even invited customers to download photos of the pizzas they had delivered onto a special website.

Like Domino's, Sbarro needs to do something to differentiate itself. It should try to recapture its Italian heritage long lost in U.S. shopping malls. It should aim for artesian appeal, or simply make a really good pizza, Hanft said.

"Why couldn't somebody do to pizza what Starbucks (SBUX) did to coffee?" Hanft said.

With Pizza Hut, Little Caesars, Papa John's and so many others, the last thing the world needs is for Sbarro to emerge from bankruptcy to serve yet another piece of mediocre pie.

 

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at al.lewis@dowjones.com or tellittoal.com)