Sub shop Quiznos announced Friday that it was filing for bankruptcy. Choked by more than half a billion dollars of debt, the chain is restructuring, cutting almost $400 million of owed money, and, for the moment ... is toast.
Pundits say the downfall of Quiznos can be pinned on a myriad of problems, but one of the main causes seems to be the company's relationship with its franchisees, who are described as "acrimonious," "disgruntled," and "maltreated" by The Denver Post.
In 2009, a class-action lawsuit settlement forced Quiznos to pay $95 million to its independently-owned franchises, that, according to the Post, originally sued because expensive ingredients made it nearly impossible to turn a profit.
CEO Stuart Mathis promised to aid franchisees, writing in a statement, "We look forward to continuing to work with and support our global network of franchise owners, who are the backbone of our business."
Stiff competition has also played a factor in Quiznos downfall. Since 2008's national recession, an IBIS report says Quiznos restaurant numbers have dropped by over 50% while its competitors, like Subway and Jimmy John's, are thriving.
And according to Businessweek, since its popular Five Dollar Footlong deal began, Subway alone rocketed to 40,000 stores and is planning to open 10,000 more in the next four years.
Boasting higher quality sandwiches and toaster ovens, Quiznos soon discovered "that all most people want from a sandwich is to know that it's healthy and cheap."
The news comes after weeks of bankruptcy rumors, but the chain has already laid out a blueprint to get back in the sandwich game.
According to the Denver Business Journal, Quizno's will reduce its sub costs, offer loans to struggling franchisees and even provide new incentives for interested owners.
Perhaps they should work on their advertising strategy too, for who could forget those wacky singing rats. "The Quizno's subs! They are tasty, they are crunchy, they are warm because they toast them!"
That was weird. Anyway, despite the whole bankruptcy thing, nearly all of the sub shop's 2,100 franchises will remain open throughout the restructuring process.