In this FDD Talk 2015 post, you’ll learn the following:
- Section I – Background information on the Quiznos franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Quiznos franchise, based on Item 7 of the company’s 2015 FDD
- Section III – Presentation and analysis of Quiznos’ financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
- 2014 average gross sales for the top 25% bracket, middle 25% bracket, and bottom 25% bracket of all Quiznos Restaurants
- 2014 average gross sales for the top 25% bracket, middle 25% bracket, and bottom 25% bracket of all franchised Quiznos Restaurants
- 2014 average gross sales for the top 25% bracket, middle 25% bracket, and bottom 25% bracket of all franchised traditional Quiznos Restaurants
- 2014 average gross sales for the top 25% bracket, middle 25% bracket, and bottom 25% bracket of all franchised non-traditional Quiznos Restaurants
- 2014 average gross sales for the top 25% bracket, middle 25% bracket, and bottom 25% bracket of all franchised convenience Quiznos Restaurants
Section I – Background Information
Following numerous closings and bankruptcy, a restructured Quiznos is finding a hopeful future on the international front, pushing for 1,000 international locations in 40 countries by 2020.
In April 2015, the sub sandwich chain announced an agreement that will bring 1,500 units to China over the next 15 years. Quiznos International President Ken Cutshaw said the deal is the largest known franchise agreement in terms of unit count, bettering Dunkin’ Donuts’ recent deal for 1,400 locations in China.
The Quiznos deal is with the Parkson Retail Group of China, part of The Lion Group of Malaysia. The group plans to start with three Quiznos stores in Shanghai this year and add 100 more in 2016 before moving further into China.
Quiznos currently has about 650 international restaurants.
Chain Predicts Modest Growth in 2015 after Restructuring
Quiznos once had about 5,000 restaurants in the U.S., but fared poorly during the Great Recession. In 2014, locations dropped to about 2,100 amid sales declines, struggling franchisees and massive debt before Quiznos filed for Chapter 11 bankruptcy protection in March 2014. The chain emerged from bankruptcy in July that year and predicts modest growth through 2015 followed by a string of strong years.
The Denver-based toasted-sandwich chain is looking for greater international reach with significant expansion in Asia. The chain entered Malaysia in October 2014, United Arab Emirates in September and Taiwan in August. Franchisees plan 100 additional units in Malaysia and Taiwan and a combined 75 in UAE, Bahrain and Oman.
Among other planned new international openings within Asia is a 24-hour restaurant in Indonesia that would be the largest Quiznos in the world at 10,000 square feet.
Founder Popularized Toasted Subs
Quiznos was founded by Jimmy Lambatos in 1981 with a single location in Denver, Colorado, where the restaurant attracted attention because of its toasted subs. Rick Schaden became the first franchisee in 1987 when he opened a store in nearby Boulder, Colorado. Four years later, Schaden and his father, Richard, bought the franchise operation.
The sandwich chain did not invent the concept of toasted subs, but popularized it through advertising. Competitors such as Subway, Boston Market and Blimpie began to offer toasted subs between 2004 and 2006.
Quiznos reached 100 locations in 1996 and 1,000 by 2000. In 2005 the chain surpassed Blimpie as the second-largest sub sandwich chain in North America. But Blimpie and Jimmy John’s are neck and neck with Quiznos in 2015. All are dwarfed by Subway, whose more than 43,000 locations make it the largest restaurant chain in the world in terms of units.
New Leader Joins Chain
Doug Pendergast joined Quiznos as president and CEO in January 2015. Pendergast most recently was president and CEO of The Krystal Company. He succeeds Stuart Mathis, who resigned to seek other opportunities. Pendergast plans to work on building trust with franchisees as Quiznos rebuilds.
TV Ads Out, Digital Ads In
Among the changes for Quiznos after bouncing back from bankruptcy was dropping expensive TV ads whose returns diminished. The chain’s advertising budget now goes for print media and digital advertising, with more going toward digital. It is working with TubeMogul to perfect its new digital focus.
Pretzel Bread Added
The Quiznos menu has a new variety of bread, as of April 2015: pretzel bread. The chain noted that pretzel offerings on sandwich menus have increased 170 percent since 2010.
Ciabatta Toasties Hit the Menu
Quiznos introduced Ciabatta Toasties in September 2014, with the new subs coming in three varieties: Honey Dijon Ham, Turkey Pesto and Veggie Caprese.
Pasta Lineup Accompanies Subs
Quiznos introduced its Toasty Pasta line in February 2014, anchored by three Mac & Cheese flavors: Classic Mac & Cheese, Bacon Mac & Cheese and Lobster & Seafood Mac & Cheese. Also on the pasta menu are Spicy Sausage Marinara, Meatballs Marinara and Chicken Pesto varieties.
Section II – Estimated Costs
- Please click here for detailed estimates of Quiznos franchise costs, based on Item 7 of the company’s 2015 FDD.