A New Era Arrives at Quiznos

Quiznos has faced quite the rocky road in the past dozen years.

The chain, founded 40 years ago, once boasted roughly 5,000 stores. Since 2007, that figure decreased rapidly due to a variety of factors, including the Great Recession due to its heavy office footprint, a growing number of fast casuals entering the space, and issues with franchisee profitability.

In the past four years, the chain went from roughly 500 U.S. stores to fewer than 300. Sales dropped from about $180 million in 2018 to $160 million in 2019, or a 11.1 percent decline, according to FoodserviceResults. In between that time, Quiznos was acquired by REGO Restaurant Group, which is backed by High Bluff Capital Partners, a private equity firm specializing in transformation opportunities.

Fulfilling its reputation, High Bluff and REGO initiated an evolutionary process in mid-2019 when they formed a partnership with Prophet, a business transformation consultant. The good news, REGO president Mark Lohmann says, is several members of the management team worked with Prophet a number of times at previous companies. So Quiznos knew it would receive exactly what it wanted—a complete revitalization of the brand.

During the process, Prophet conducted comprehensive market research and delivered recommendations deeply rooted in consumer insight. The end result is a refreshed store prototype featuring updated designs, new menu items and cooking equipment, and drive-thru aspirations. The upgraded model, which was introduced to franchisees in late 2020, is scheduled to make its debut in New Mexico in July.

The pandemic did little to stop the momentum, Lohmann notes.

“We certainly did throughout 2020 revisit our positioning just to ensure that there weren't any major changes that we needed to implement,” he says. “But happily, what we found was that what we have designed in partnership with Prophet was already a great fit for what our guests had told us in 2019, and what our guests told us in 2020.”

In terms of the menu, Quiznos hasn’t shied away from innovation in recent years. In 2019, the chain released an LTO Pit-Smoked Brisket Sandwich, added a new Prime Rib Sandwich, and tested plant-based corn beef sandwiches. Amid the COVID crisis, the brand rolled out “Quiznos Market” when grocery supplies were limited, and introduced an LTO Cubano Sandwich and a Winter Turkey Feast Sandwich.

But with the refreshed identity, Lohmann says Mike Geisman, REGO’s director of culinary and innovation, has outdone himself. The brand has several ideas in the testing phase, and many of them are tied to new flat top grills and fryers. For example, the grills will be used for both sandwich and non-sandwich items—such as a cheesesteak platform—to add flair and aroma throughout the building. The fryers will allow Quiznos to offer unique items like donut holes and French fries.

Lohmann says it’s premature to reveal too much of the menu, but he does hint that the entire team has been “blown away by the flavors coming out of our test kitchen.”

“We've just got to get through the testing phase on this before we can commit to the exact items that are going to be in the prototype,” the executive explains.

The goal is to match consumers’ changing tastes. The same train of thought informed Quiznos’ new store design, which Lohmann describes as a “contemporization.” The main idea was to keep historical brand colors, but tweak them in a way that signals change. This includes an upgraded logo that hasn’t changed since 2001. In the middle of this year, Quizno’s website and other digital channels will be updated to reflect the new branding.

Anand Gowda, founder of High Bluff Capital, foreshadowed these changes at the beginning of 2019. At the time, Gowda told QSR that Quiznos enjoys national equity in most of the major DMAs in the U.S. In turn, that allows the brand to go after unique marketing that other chains can’t, like “some quirky edgy things that maybe the customer is not expecting.” His vision was to bring Quiznos back to the “hip, cool, interesting, edgy concept that it once was.”

That’s exactly what the chain is aiming for with the new prototype.

“If you look at the new logo, we want it to be clean,” Lohmann says. “We want it to be simple, and we want it to be minimum to communicate the premium and high quality elements of Quiznos that exist today and will continue to exist and only be amplified as we move into the future.”

Quiznos

This year marks the dawn of a new era for Quiznos.

The new store design also contemplates future drive-thru locations, a channel that has grown significantly throughout the pandemic. In fact, drive-thru went from increased orders by 4 percent in January 2020 to 22 percent in December, and ended the year with a 44 percent share of off-premises orders, according to the NPD Group. Lohmann says Quiznos identified drive-thrus as a necessity prior to the pandemic, and that COVID placed the channel higher on the priority list.

The brand, which currently operates a handful of drive-thrus, will place the amenity in select cities based on trade markets and consumer demand.

“I don't think we can sit here and say that every future Quiznos is going to have a drive-thru, but again, it's going to be a high priority for us—just given what we learned during COVID, but also what we learned in the insights process before COVID, like the speed and convenience,” Lohmann says.

The prototype will be the standard for all new builds. As for existing stores, Quiznos is giving franchisees flexibility on the timing and scale of the rebrand rollout. There will be a variety of remodel offerings, including opportunities for operators to participate without investing in extensive additional equipment. Lohmann notes that Quiznos is going to position the prototype in ways that suit franchisees’ “individual needs specific to their trade area and also specific to their existing consumers and guests today.”

“We see this rebrand as an opportunity for them to drive best-in-class results, and that's what we've communicated to them,” Lohmann says. “And they've taken note. So everything we've heard so far, they've been very pleased with the rebrand strategy, and the majority of whom we've spoken are excited for what the future holds.”

The aggressive move comes seven years after the chain emerged from bankruptcy. At the time, leaders of the brand agreed to a restructuring deal that reduced debt by more than $400 million. The plan involved three of the top figures in the company forming an agreement to trade $445 million in debt for $200 million in new debt plus 70 percent of shares.

During its years of retraction, the company was in heavy litigation with franchisees over purchasing policies and high food costs. In 2016, then CEO Susan Lintonsmith initiated a “New Deal” program to shrink royalties and payments toward the marketing fund. The move reportedly saved franchisees about $12,000 per year, but the footprint continued to shrink.

But 2021 is the dawn of a new era for Quiznos. Lohmann says the refreshed brand and remodel will excite operators and meet the evolving needs of consumers.

“It will increase our already high brand awareness and, we believe, will bring industry leading returns to our franchisees,” Lohmann says. “But most importantly, this is going to allow us to continue to deliver high quality, fresh, and bold flavors in a variety of innovative ways. I don't think that guests will be able to get a better product anywhere else, and with the new brand elements, they're going to be doing so at some of the best designed restaurants in the industry. I can't wait for that first location to open.”