Web Exclusive | February 2012 | By Daniel P. Smith

Saving Quiznos

After flirting with bankruptcy and enduring years of falling numbers, Quiznos is poised to right the ship.

For the first time in years, Quiznos franchisee Kevin Tackett and dozens of his fellow franchisees with the toasted-sub chain have reason to smile.

After three gloomy years of falling sales, shuttered stores, and mounting company debt, Quiznos finally appears positioned to reinvigorate the brand, build franchisee profitability, and unlock a more promising, sustainable future.

“The optimism is robust,” says Tackett, who owns seven Quiznos stores in Florida and one in Virginia.

On January 24, Quiznos dodged an almost-certain bankruptcy when the private equity firm Avenue Capital Group assumed more than 70 percent ownership of the Denver-based sandwich company. The New York hedge fund will inject $150 million into the sandwich chain.

“Now the question marks and uncertainty are gone and we recognize there’s a clear path moving forward,” says Shultz Hartgrove, senior vice president for convenience and nontraditional at Quiznos.

At its peak in 2008, Quiznos captured more than $2 billion in sales at 5,000 outlets, according to Technomic estimates. But by the time news broke last fall that Quiznos was struggling to pay its debt, few saw it as a surprise. The privately owned company was estimated to have dropped 600 net stores and 14 percent in sales in 2010 alone, a spiral that continued into 2011.

John Gordon, founder of San Diego–based Pacific Management Consulting Group, has followed Quiznos for the last six years. He says Quiznos embraced an expansion culture that spurred its rapid growth but ultimately created its troubles.

“With weak store-level economics and so many units closing, it was only a matter of time that the debt service would become an issue,” Gordon says. “There simply wasn’t enough focus on operations.”

With Avenue swooping in, Quiznos not only avoided costly legal proceedings, but, more importantly, received a much-needed opportunity to refocus on its core business.

That’s precisely where Quiznos executives are turning their attention.

Senior vice president of franchise development Sean Fitzgerald, a newcomer to Quiznos’ corporate management team, says the sandwich chain will focus on “thoughtful and meticulous growth with the right people and the right locations.”

“Our goal coming out of this repositioning is to be the best franchised system in development.”

In the next year, Fitzgerald says, Quiznos hopes to open about 100 traditional units and as many as 150 nontraditional outlets, led by units inside HESS, Meijer, and Champlain Farms grocery stores. Some of the new outlets will feature a revised store design, with stainless steel, woodwork, and softer colors producing a more modern look.

“These growth plans aren’t overreaching and they’re centered on the long-term,” Fitzgerald says. “We’re going to scrutinize every site … and make sure we’re aligning with partners who understand our system and can execute.”

The $150 million cash infusion also allows Quiznos to launch a consumer marketing campaign. The effort will begin this quarter and, Fitzgerald says, “will bring [Quiznos] back to a pre-2008 advertising level.”

“The campaign will be significant in establishing that the Quiznos brand is better than ever, with an emphasis on quality ingredients and customer experience,” he says.

As Quiznos attempts to grow the brand hand-in-hand with franchisees, Hartgrove says, the company will invest heavily in analytics and devote increased attention to operational standards and communication with franchisees.

“Our goal coming out of this repositioning is to be the best franchised system in development,” Hartgrove says.

That’s certainly the hope of franchisees. Moving forward, Tackett says, many want to see Quiznos employ marketing professionals with experience in directing a turnaround effort, as well as operational leaders skilled at running a successful system.

Gordon says Quiznos must also address its company-owned supply chain, a long-contentious issue with franchisees. “The supply chain is something that must be restructured and reoriented so that lower costs are realized at the store level,” Gordon says. “Communication will certainly help make that better.”

Tackett, one of many franchisees critical of the brand during its slide, hopes that new ownership listens to operators and tries harder to unite the entire system.

“We want them and us to be the same thing,” Tackett says. “We want our profitability and market share to be the metric that measures their success.”

Tackett says that based on what he’s witnessed so far, he’s encouraged and excited for the future of the brand.

“I think this new ownership gets it. They understand that there are standards in the industry that have to be in place, such as field operations, marketing support, and a focus on franchisee profitability,” he says.

“There’s still a lot of work to do, but we’re excited because commitments are in place, checks have been written and cashed, and there’s a media plan more robust than anything done in 2011.”


As a former owner of 4 Quizno's locations I am amazed at just how far this business has fallen. Nothing will be corrected until Q leadership actually comes clean.600 store closings in 2010? Double that number! They went from selling franchises to giving away closed stores. They tried to have corporate run stores, but they also closed because they couldn't make money. Does anyone remember when they gave a franchise away on Ellen? Closed within 6 months...the owner given the store on Ellen walked away after just 3 months.A Supply Chain issue that needs to be addressed? It is more like a corporate greed initiative that wasn't making enough money through royalties and new store opening...so, they created a distribution structure that crushed the business model through enormous markups on standard products. Look closely at the numbers...in 2003 and 2004 the distribution company earned a little over $2,000,000 in profits, by 2008 that number escalated to over $100,000,000....all off of the sale of products to their own franchisees!Worried about Same Store Sales year over year? No worries...just send out an endless amount of BOGO coupons. Lower levels of profitability for the Franchisee, but on paper it appears that everything is going well!The good news is the food is still great!

what about this giving the customer choice of toastIng or not toasted

The Q executives should be one example of american greed that distributed franchise to middle class family like taxi meter during year 2003 - 2007. The more stores open the more money in their pocket. More royalty fee, more sales on their distribution company without regards to franchise owner how they make their own sales. How the owner can pay their rent, utilities and pay payroll to their crews.Their business model will not work unlike the other sandwich company Subway!

I used to own four stores,I invested all of my life saving in faith of quiznos chasing my american dream.Today i ve job making what i used to pay one of my store manager tryning to servive with a family of four.I am in alots of debts to pay ..Thanks to quiznos....When i joined quiznos i was told 7+4 that 11% royalty which is understandable .But they did not mentioned about quiznos will also be making money out of everything u purchse such as food, paper product etc.we ve to purchase from them,which will not leave me room to breath.There will not be any margin for franchiser to survive.I think it is a perfect example of golden egg story by quiznos ceo rick scheden.I forget to mention out of four i was able to sell only one store (which closed six month later by new owner) other three closed.I wish I ve never heard of quiznos

Quizno's has always had a great tasting product however I think in today's economy they will need to bring the price point down a tad, you can't get out of there without spending $8.50. Also, I think Quizno's needs to stop going after Subways jugular, it just looks stupid opening up stores right next to Subway's. If you focus in on the quality of your product, price point and your franchisees you should make out ok Q Corporate. That's what I think.....

Now it's time to let another sandwich company take a chance at Subways. First you (Quiznos) thought $11 turkey sandwiches would be a hit, then you saw that even at $5 they were an epic fail. Then you brought out torpedoes. Then delivery with a $5000+ franchise fee to implement. At the same time, you butchered and clobbered your franchisees. You robbed them blind, just read every QSR issue that mentioned you.You remind me of Ford in the 70's, 80's, 90's, and 2000's. "Hey, we're not the same car we were 5 years ago, we are better!". At the same time, you were the same piece of junk with different names, colors, etc.The ONLY way to save this brand-----Dump the name. The same thing the banks had to do, dump the name like a bad nightmare. Then figure how to incorporate fresh baked bread, so I no longer avoid getting day old bread. Simplify your menu with 12 sandwiches at most. Get rid of the toaster, we all know it's sole purpose is to make old bread taste better than it should. Make ammends with franchisees (again) and stop stealing from them by double dipping.When you've done this, figure how to simplify your systems, and focus how to make better sandwiches than your competitor. If you CAN'T even do that, then give up, because I can easily make my own sandwich (with few ingredients) that rival a $5 footlong.Why is it that nobody at Quizno's can take the lead at this firm, to come up with this??? Because they have only focused on how to increase revenues on the backs of franchisees. PS....please mail me a BOGO for my free advice.

So true and very well said

It's a doomed company.

As a former owner, store 4181, I know first hand what it takes to turn this brand around.First, ditch everyone at the top and start fresh. Only then can real change take place.Next, Update the decor, the dark colors may be trendy in New York, but only make 1600 square feet look like a cave.Be sure to give the customer what they want. We know the recipes are wonderful as is, but encouraging customer participation leads to happy customers and good repeat business.Add Pizza and Wings to the menu - you already have the oven. Let's get full potential out of these high margin items!Add breakfast- The ingredients are already on the make table for any combination of eggs and meat with veggies. All day sales!Deliver- I added Delivery to my QSR and enjoyed a 20% increase in sales overnight.This is just a beginning, but would get the company on the right track.

Hi I am thinking about one quiznoz store in AZ or Fl.....is it really that bad? The numbers looked pretty good to me!

The reason Quiznos can't compete is simple, their food is horible. The last time I went I took my daughter, I got the "prime rib" and she got the ham(she always gets ham). My sub had a strange metallic taste but I kept eating my daughter put hers down and said she didn't like it. I tasted the ham and guess what, it tasted just like beef! This is why I will drive out of my way to avoid a Quiznos.

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