Exclusive: Quiznos exec speaks, may 'compensate' customers for botched sub offer

Quiznos execs spent the weekend reading the complaints about its Million Subs promotion stack up here on WalletPop. Today, its Chief Marketing Officer, Rebecca Steinfort, contacted us to explain what went so wrong.

The crux of the issue, from her standpoint, is that Quiznos is trying to turn itself into a less expensive brand, and it's using this promotion to give customers a tour of the changes. Unfortunately, not all of its franchise owners wanted to come along for the ride. Here's what she told us:

Why did Quiznos decide to do this promotion?

"Quiznos is making some pretty big changes to its value proposition to try to make it better for customers. In early January, we lowered the majority of prices on our menu. We want to go to an everyday lower price menu. So what we're trying to do in the first quarter of the year is bring people in so they can see that really understand that we really are affordable everyday. The Million free sub giveaway is really an extension of some of the earlier activities in the quarter."

Did you get inspiration from the Denny's free breakfast promotion during the Super Bowl?

"Actually, no. We've had this in the works since November. We communicated this campaign to our franchise owners through back in a series of market meetings in December."

How much did the promotion cost Quiznos?

"I don't want to give you specific numbers because I'll be wrong if I get specific. But you know, we had to build the website. We are reimbursing our franchisees for the cost of all the subs that they give us. We did a little bit of advertising just to activate the campaign, which didn't take much to get this thing going. We spent about $25,000 activating this, whereas Denny's spent, what...$2 or $3 million on a Super Bowl ad. I'd say that probably wasn't necessary for them. "

Do you pay franchises completely for the free subs, or is it just a subsidy?

"It's the majority. It's not all of it. We're paying about 90% of the cost of those subs."

What are the problems with the promotions as you've seen them develop over the past week?

"I think subs certainly got consumed faster than we would have anticipated. As I said, we spent very little in activating and advertising the campaign, and we had over a million people respond in less than three days.

"I think as a by-product of that, our franchise owners got a bit overwhelmed. They've known about this since December, but I think the volume in which [customers] were coming in surprised a lot of people. As you know, we've had some franchise owners not participate or not participate fully, and that has caused some issues with consumers. So, again, we are doing everything we can to get them to participate. We are largely subsidizing the food costs for the free subs. And we'd love to hear from any consumers who have had issues. We've set up a dedicated helpline [millionsubs@quiznos.com] to help sort things out with people who've had issues. We don't want anyone to walk away with bad experiences, and we certainly don't want our franchise owners to suffer for this.

"The internet is an amazing thing. The term I use is "We've caught a tiger by the tail" for this one in terms of how fast these things spread around. So we're working to mediate any issues customers have had."

May franchise owners opt out in the middle of the promotion?

"They are all independently owned-and-operated businesses, so they can choose whether or not to participate at any point in time. But we don't want customers to be dissatisfied. We encourage them to e-mail us and we'll do our best to make things right. If they didn't get the deal they thought they should have had, they should e-mail us."

What will you do for customers who e-mail you with a complaint?

"It will depend on what their issue is and what their complaint is, but we will work with everybody to make it right."

Does that mean giving them a coupon if their complaint is legitimate?

"It might. We don't want to say specifically what we're going to give out to various people. We're going to look at what people's issues were and we will make sure that we compensate them for their issue appropriately."

So there will be forms of compensation of some kind?

"Yeah, we will make it right. Again, there are a lot of different experiences that people had. Let's just say we're going to talk to customers and we're going to see based on what happened to them what it's going to take to make it right with them."

Can you estimate what percentage of franchise owners have declined to participate in the promotion?

"I don't have a precise number. We know the vast majority are participating based on what we can see and what we're hearing from our field people."

There have been a fair number of angry comments from franchise owners on WalletPop.com. How many coupon redemption problems have been an issue of franchise-owner revolt?

"Some of the challenge right now is we are trying to reposition the brand to be more value-oriented. Strategically, that requires us to change our pricing and to do some discounting to bring people in... It's a little bit of a tough time period for franchise owners as we go through this repositioning. And that's a little bit of what you're seeing."

So Quiznos is going to be a value-priced brand from now on?

"No business is going to be successful if you don't give customers what they want. We've done a lot of research that says Americans love Quiznos' food. It's just too expensive. It was considered a "pay day treat" for many people. What we need to do for our franchise owners is come up with a value proposition that appeals to more of the mass consumers in this country. That's what we're trying to do right now: Bring our pricing in so it's more value-oriented. We don't want to be the low-price player in the market, but we think we need to have the right price for this food and the food quality that we've got, particularly in this economy. It was the right thing to do before the economic meltdown, but it's absolutely necessary given the state of the economy right now."

Should Quiznos ever decide to do another promotion like this, what has it learned?

"I think we would focus on getting better alignment with our franchise owners in advance. No question. But on the consumer side, there's clearly interest in the offer. I think we learned a lot about how powerful the internet is. I think it is something that you're likely to see from us again in the future, but no doubt we need to get every single one of our franchisees on board before we try this again."
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