Analyst Insight by Elizabeth Friend - Senior Consumer Foodservice Analyst
Quiznos chapter 11 bankruptcy filing came as no surprise to anyone, as the company has been on a long, slow decline since before the recession. Since 2007, the sandwich chain has fallen in the global foodservice brand rankings from 30th to 71st, shrunk from 5,100 outlets to 2,600, given up more than half of its global market share, and failed to see annual sales growth during a single year. The company has also been locked in conflict with franchisees, who have filed lawsuit after lawsuit alleging that the operator has been unfairly marking-up supply costs through approved vendors and simultaneously setting pricing and discount promotions, making it difficult to turn a profit.
Quiznos’ fall has come during a boom time for similar sandwich chains, including global leader Subway and up-and-comers like Potbelly Sandwich Works, Jimmy John’ Gourmet Sandwiches and Firehouse Subs. The former has found far-reaching success by growing aggressively in key markets, including Brazil, Russia, the UK, Mexico and France, and building a positioning based on a healthier menu, high value, and endless customisation. Subway has also been helped along by its low operating costs and streamlined franchise start-up model, making it easy for the operator to find international partners even in lower-income emerging markets. The others have been able to find success on a smaller, but similarly fast-growing scale by differentiating themselves with dining experience, higher quality ingredients, more exciting branding and in Jimmy John’s case, convenient delivery. Amidst all of these more efficient and more exciting brands, Quiznos has simply fallen behind, failing to differentiate itself now that toasted sandwiches are no longer a proprietary offering.