Quiznos Sub aspires to be a leader�not just in sandwiches,but the industry overall. For CEO Rick Schaden, that means going places quick-serve isn�t known to tread. Interview by Greg Sanders

In the modern era of restaurants, the industry is unquestionably dominated by entrepreneurs, not restaurateurs. This is not necessarily a bad thing, unless said entrepreneur doesn�t care about the food. It is still the restaurant industry, after all, and whatever the financial motivations might be�and we all want to make money�food is at the heart of the business.

It helps if the food is good. This is a fact not lost on Rick Schaden, the chief exec of 2,700-unit Quiznos Sub. Schaden recently sat down with QSR to talk about his concept�s explosive growth�nearly 70 percent increase in U.S. systemwide sales on the strength of a 36 percent increase in units in 2002�and the quality of the product was rarely far from his lips. It is not merely lip service, either. Quiznos is a favorite of certain QSR staffers for one reason: It�s a good sandwich.

Schaden likes to point out that Quiznos has been ahead of the premium-product game for years. While competitors like Subway are only recently introducing more creative breads and sandwich toppings, Quiznos rolled out roasted red pepper sauce and rosemary-parmesan bread five years ago. Now that the rest of the industry has caught up, Schaden says we can expect new directions in product development from his concept.

It�s called, in Quiznos parlance, zigging and zagging, and it applies to everything from the product to advertising. It is the key to realizing Quiznos� goal of being a leader�not just in the sandwich segment, but in quick-serve in general.

Schaden elaborates.

How did you get involved with Quiznos?

I actually started as a franchisee. The way I got involved was, my senior year in business school at the University of Colorado, I wrote a senior project on Quiznos, and I ended up opening a Quiznos in Boulder near the University.

So you came out of the restaurants yourself.

It�s interesting. If you look at our top five executives, four have come out of our franchise system. We have a tendency, when you look at our staff, to draw out of the franchise system, and to draw out of franchise systems in general. We also have a lot of multi-unit franchise owners from other chains who sold their restaurants and came to work at Quiznos corporate. We really like the perspective of somebody who�s been in the restaurants and owned the restaurants and made their living from the restaurants.

What are the challenges you face with R&D in today�s marketplace?

There are a couple of different things going on with consumers right now. They�re looking for variety, for one thing. In quick-serve, the usage has gone up so much in the last 10 years�Americans use quick-service so much more than they used to�that as they broaden their use, they also want more variety. If you�re going to eat in a quick-service restaurant once a week, a cheeseburger is fine. But if you�re going to eat it seven times a week, you�re going to want some variety. You�re not going to eat a cheeseburger every day. You�ve got to be able to offer variety. You have to have choices.

If your heritage is cheeseburgers or fried chicken, it�s a lot harder to come out of that box.

The second thing is, if you�re going to eat it every day, you�re also going to want some health value to the food. And Americans are really starting to define healthy or �good for you� by saying �made fresh,� with the ability to choose what you want on it. So if it�s made fresh for you, you can say, �I don�t want the cheese,� or �I want the cheese, but I don�t want the dressing.�

Those two things drive menu right now, and they drive development. I think that�s been a big part of our success, because we�ve got an operating platform that�s pretty variable. Things that are sandwiches or have to do with sandwiches, we have the ability to do in our operating platform, and we believe we have the credibility with consumers to do it. If your heritage is cheeseburgers or fried chicken, it�s a lot harder to come out of that box to meet those new demands from consumers.

You mention how Americans are defining health these days. It seems everyone has a different definition of what�s healthy.

That�s what has become really interesting. Americans don�t define �healthy� all one way. Some people believe it�s low fat, some believe it�s low carb, some believe it�s low calorie, and a lot of different things. It�s tough to put your finger on one thing and say, �We offer this; we�ve met their qualifications for a �healthy alternative.�� Instead, we believe that what you want to do is offer variety and the ability to customize. People can take the cheese or not take the cheese or whatever it may be, and if it�s made for them, they can choose within their world what�s healthy to them. Choice has a lot to do with addressing that need.

These days you see Arby�s playing up the roasting technique, Burger King playing up flame-grilling, and so on. Has toasting taken on additional importance for Quiznos?

We really see toasting as supporting a role within our recipes. It�s something that makes our subs taste better, along with higher quality meats and higher quality cheeses. We typically use quite a bit higher quality ingredients than the rest of the quick-service industry. We use a honey roasted ham, 100 percent dairy-made cheese rather than a processed cheesefood, things of that nature. So we�re already a step up on ingredients. Then by toasting those things�for instance, our salami has a lot of garlic in it. We choose a salami with a lot of garlic because when we toast it, it brings the garlic out. So it�s an overall part of the recipe and how we make our sandwiches. We believe it�s important, but it�s like anything else�we don�t stand on that alone. We really stand on the ability to deliver leading-edge tastes and the most flavorful sandwiches in the industry.

We believe growth is important. But at the same time, we�re very focused on unit profitability.

How do you go about finding the right franchisees?

We�re looking for owner-operators. We�re an owner-operator�based chain. Just like when I ran my restaurants, we�re looking for people who want to buy and work in the business. So we sell to people who are going to operate the restaurant. You don�t need prior experience. What you need is enthusiasm and energy, and you need face-time in the restaurant with your crew and customers. We�re not looking for passive investors or financial investors.

This is the business I grew up in, Brooksy [Smith, executive vice president] grew up in, and we like the business. We like to work the restaurants. We look for people who work the restaurants. We have some minimal testing to make sure they have the skills to run a business; otherwise we�re really looking for people who answer the question �Yes, I want to run a restaurant.�

Within America today there are a lot of people who have perhaps grown up in middle-management or working for other companies, and in this environment you have a lot of people who thought it was safer to work for another company than it is to work for yourself, and I think they�re finding they�d rather control their own destiny. You can always work harder on controlling costs if it�s your business, rather than depending on a management team above you to do that for you so you can keep your job. So franchise sales are brisk.

You don�t see restaurant experience as necessary.

We have a Restaurant Profitability Committee whose job it is to continue to comb through the costs at restaurant level�everything from insurance to pest control to food costs�and come up with recommendations to lower costs and increase profitability. The committee is run by a franchise owner who is out of the computer business. He�s highly successful and was our �Franchisee of the Year� two years ago.

On Subway: How do you continue to grow when you�ve already got record-high penetration levels?

Quiznos took the unusual step, for a quick-serve, of placing Super Bowl ads. Why was that a good decision?

It brought a lot of attention to the brand. Probably one of the nicest things about Quiznos is we�ve got very good average unit volumes, and yet our total awareness is still very low. We�re at awareness levels that are half of the major quick-serves, and anytime we bump awareness, we see sales go up. To take a large awareness vehicle like that and wrap a lot of PR opportunities around it, it was a great opportunity. I�m not sure it would be a great buy for other chains, but with where we were with regards to awareness�it was a good, big hit in awareness, and we saw good sales increases from it.

Continuing with the advertising theme, what�s the status of Chef Jimmy? He�s on hiatus?

Chef Jimmy is a fixture with us. He�s been around since the first Quiznos, and he works hard with us on sandwiches and recipes and menu ideas. He spends a lot of time with our franchise owners and at grand openings, and he continues to be out there representing Quiznos with the focus on the food. His television personality is another part of him, and we�re just right now taking a look at television overall.

Where do you see Quiznos in five years?

Our mission is to be a leader in the quick-service segment overall. That means a leader against everybody, not just sub sandwiches. We�ll continue to grow in that direction. That doesn�t mean we�ll have the highest number of restaurants; it really means we want to be the best at what we do. That�ll certainly mean increased penetration levels and increased restaurants, but more importantly it�ll mean leading with product and having profitable restaurants.

QSR subscribers: get the answers to these questions and more in your January issue!! What�s the state of the brand today? What�s the Quiznos philosophy of expansion? Where does real estate fit into the expansion picture? What other challenges do you face in growing the Quiznos brand? Everyone is upscaling their menus these days. What has this general upscaling meant for you? Where do you see Quiznos relative to Panera? How much room is left in the sandwich segment? Want full coverage of every QSR interview? Subscribe now!