S&P cuts credit ratings of Sbarro, El Pollo Loco

NEW YORK Standard & Poor’s Ratings Services cut the credit ratings of two restaurant companies, Sbarro Inc. and El Pollo Loco Inc., further into junk status last week on concerns the companies could break lending agreements.

The S&P lowered Sbarro’s ratings on the company’s $25 million revolving facility, $183 million first-lien term loan and its $150 million senior notes because the rating agency expects that Sbarro will breach its leverage covenant when it becomes more restrictive at year-end.

El Pollo Loco’s corporate credit rating and senior secured credit facility rating were lowered because of what S&P called a “limited cushion over financial covenants.”

Sbarro operates or franchises 1,064 Italian quick-service restaurants. El Pollo Loco operates or franchises about 400 fast-casual chicken restaurants.