At it's peak in 2007, Quiznos had ~5,000 stores and was doing close to $2B in revenue per year.
Today they have ~200 stores left and can't stop the bleeding.
Here's how the toasted sub empire collapsed π
Today they have ~200 stores left and can't stop the bleeding.
Here's how the toasted sub empire collapsed π
In 1978, Jimmy Lambatos & Todd Disner started a fine-dining restaurant in Denver called Footers.
It was there where they had the idea for an Italian style deli, so Footers became a testing ground for baguettes, dressings, etc.
The partners opened the first Quiznos in 1981.
It was there where they had the idea for an Italian style deli, so Footers became a testing ground for baguettes, dressings, etc.
The partners opened the first Quiznos in 1981.
The concept was an immediate hit.
Locals loved how toasting the sandwiches enhanced the flavors and melted the cheese.
Quiznos was a toasting pioneer, and is believed to be the first business to do it at scale.
They still call themselves the home of the toasted sub.
Locals loved how toasting the sandwiches enhanced the flavors and melted the cheese.
Quiznos was a toasting pioneer, and is believed to be the first business to do it at scale.
They still call themselves the home of the toasted sub.
By 1991, they were up to 18 (mostly franchised) locations.
That's when Lambatos & Disner SOLD the whole company to local franchisee Rick Schaden, a 26 year old who owned a few Quiznos thanks to some help from his father.
This is where things take off..
That's when Lambatos & Disner SOLD the whole company to local franchisee Rick Schaden, a 26 year old who owned a few Quiznos thanks to some help from his father.
This is where things take off..
Schaden and his father wanted growth, so they built infrastructure to support franchise owners via training, marketing support, etc.
By 1993 they doubled their store footprint to 40 locations in multiple states.
Then in 1994 they took the company public, raising $4M in an IPO
By 1993 they doubled their store footprint to 40 locations in multiple states.
Then in 1994 they took the company public, raising $4M in an IPO
With the funds from the IPO, they accelerated growth and hit 1k locations by 2000.
At that point they made a fateful decision to form a subsidiary: American Food Distributors (ADA).
They required franchisees to purchase ALL their food and paper products through ADA.
At that point they made a fateful decision to form a subsidiary: American Food Distributors (ADA).
They required franchisees to purchase ALL their food and paper products through ADA.
Suddenly Quiznos was making way more money from supplying franchisees with goods than from royalties.
In peak years, Quiznos made $200M+ from ADA, and just ~$70M from royalties.
The profits fueled more growth and they hit 2k locations by 2003.
In peak years, Quiznos made $200M+ from ADA, and just ~$70M from royalties.
The profits fueled more growth and they hit 2k locations by 2003.
But franchise owners weren't happy - they were being pressured into offering low prices while paying above market prices on their food and paper goods.
Not to mention Quiznos was using marketing funds to run questionable tv commericals on their behalf:
Not to mention Quiznos was using marketing funds to run questionable tv commericals on their behalf:
To make matters worse, in 2004, Subway went head-to-head against Quiznos and started toasting sandwiches, destroying the only moat they had.
Somehow Quiznos managed to continue growing, and hit ~5k stores in 2007, but internally the company was ready to implode.
Somehow Quiznos managed to continue growing, and hit ~5k stores in 2007, but internally the company was ready to implode.
Hundreds of franchisees banded together and sued Quiznos for the markups on their food supplies and the mandated retail prices that made it impossible to make money.
When the Great Recession hit in 2008, the already struggling stores began to shutter.
2k+ stores closed by 2012.
When the Great Recession hit in 2008, the already struggling stores began to shutter.
2k+ stores closed by 2012.
The store closures created a death spiral that couldn't be stopped.
Less stores meant less franchisee revenue going to the marketing fund, making the system weaker as a whole.
With already tight margins, it was too much for existing store owners to handle, & closures continued.
Less stores meant less franchisee revenue going to the marketing fund, making the system weaker as a whole.
With already tight margins, it was too much for existing store owners to handle, & closures continued.
A majority stake buyout in 2012 by Avenue Capital Group wasn't enough to save Quiznos, as they filed for bankruptcy in 2014 - reporting $875M in debt.
They ultimately settled multiple major lawsuits, one costing $200M and another $95M for franchisees who couldn't even open.
They ultimately settled multiple major lawsuits, one costing $200M and another $95M for franchisees who couldn't even open.
The franchise model can be amazing when it works, but it can go the opposite direction too.
Quiznos lost focus on supporting franchisees as partners, & instead became an expensive food distributor that treated them as customers.
A quote from a former franchisee sums it up:
Quiznos lost focus on supporting franchisees as partners, & instead became an expensive food distributor that treated them as customers.
A quote from a former franchisee sums it up:
βWhat theyβre doing is criminal. I lost my savings. I lost my wife. I cashed in my life insurance policy. I lost everything, but Iβm so happy just to be out of it.β
In 2018, Quiznos was purchased by High Bluff Capital Partners, and has declined from the roughly 300 locations it had that year to the ~200 it has today.
Their royalties are priced competitively, but only surviving franchisees know if the supplies are finally priced fairly...
Their royalties are priced competitively, but only surviving franchisees know if the supplies are finally priced fairly...
If you enjoyed this thread, I tweet about franchises & the entrepreneurs behind them.
Give me @franchisewolf a follow to catch them in your feed.
FWIW: I found a Quiznos over the summer and can confirm the toasted sandwiches are still pretty awesome
Give me @franchisewolf a follow to catch them in your feed.
FWIW: I found a Quiznos over the summer and can confirm the toasted sandwiches are still pretty awesome
Sources:
youtube.com
restfinance.com
#Early_history" target="_blank" rel="noopener" onclick="event.stopPropagation()">en.wikipedia.org
scrapehero.com.
mentalfloss.com
ownaquiznos.com
youtube.com
restfinance.com
#Early_history" target="_blank" rel="noopener" onclick="event.stopPropagation()">en.wikipedia.org
scrapehero.com.
mentalfloss.com
ownaquiznos.com
@coinbase Apparently the mascot, dubbed the "Sponge monkeys" was taken from a popular meme at the time:
If you're interested in franchises and the people that own them, join 10,000+ readers on my free newsletter:
(need to update the website description)
workweek.com
(need to update the website description)
workweek.com
Loading suggestions...