- Front Page
- Biz Tools
The Franchise Owner's most trusted news source
NEW YORK CITY – Restaurant franchisors Quiznos and Sbarro filed Chapter 11 bankruptcy last month. They hope to be restructured and out of insolvency soon. In understanding what happened to these franchising chains, Blue MauMau asked branding expert Robert Passikoff, founder and president of New York City-based Brand Keys Inc. about his take on the branding efforts of Quiznos and Sbarro.
Passikoff surveys consumers and ranks the world's best brands in Brand Keys' annual Customer Loyalty Engagement Index. Prof. Passikoff also syndicates a regular column on Blue MauMau about brands, emotional engagement and predictive metrics.
Blue MauMau: How do you see Quiznos' ability to understand consumers and create brand loyalty?
Critics argue that Quiznos presents the worst of the asset light franchising model, where the franchisor owns almost no restaurants. That model keeps the franchisor in an ivory tower with little first-hand knowledge of its own customers. From its vantage point atop that tower, Quiznos' management has made some interesting choices.
For example, Quiznos focused on its big $2,000 Holman conveyor oven (see its old commercial below), which can toast a sub sandwich in roughly 60 seconds. On the other hand, Subway launched the choice of toasted sandwiches in the mid-2000s. The franchisor was pushing a cheaper toaster but its franchisee committee decided on the $4,000 high-tech Turbo Chef. It looks like a microwave but toasts in 15 to 40 seconds. Unlike Quiznos, Subway compensates for its asset light franchising model by empowering its franchise owner-operators. Its franchisees are in charge of certain systemwide operations. One illustration of this is that they own the system's international supply chain management cooperative. It brings down store costs and provides price transparency to franchisees for their goods and supplies. At one time Subway franchisees also directed the marketing firm and advertising agencies that launched the story of Jared losing weight while eating "healthy" Subway sandwiches and the legendary "5 dollar footlong" marketing campaigns.
Passikoff: The bankruptcies were mostly financial in nature. Both companies were overleveraged with capital structures that might have been all right a decade ago, but not now.
That said, from a brand perspective, Quiznos really did not know who they wanted to be when they grew up. Their positioning and offerings were schizophrenic. At one time toasted subs was a differentiator, but as capital expenditure was the only thing separating that from the competition, once the Subways of the world installed them too, that combined with the Subway "healthy" position became too strong a brand engagement mechanism for Quiznos to compete with.
Being almost totally dependent upon the franchisees didn't allow Quiznos the power to create an engaging and differentiating position (and menu of offers) and so they ended up – not a brand – but a placeholder in the category. Why go to them when you could go to real brands?
What was worse for them was that the fast-casual restaurants were coming into their own with the perception of healthier, more natural food than Quiznos could offer up. Quiznos barely made our Loyalty Engagement Index list this year, ranking last. Here's the list:
BMM: What do you make of the branding efforts at Sbarro?
Passikoff: As for Sbarro (and its financial problems notwithstanding), they stood for "food court pizza," which was just good enough to compete with the chains. But when food court traffic declined, as it has over the years, they suffered badly. In addition they couldn't keep up with the innovations that chains like Domino's and Papa John's brought to the category. Sbarro became the brand that stood for gut-bomb hot dough pizza, and if that doesn't sound appetizing, it's because it wasn't for consumers. They ended up next-to-last in this year's rankings, which was this for pizza:
And yes, in a nearly-pure franchising model, the input from your franchisees is critical. As I have not sat in on franchisee meetings, I simply look at the brand performance and the bottom line, which most of the time turns out to be one and the same. Strong brands stand for something more emotional than rational. When it cannot be pinpointed what emotional brand resonance is working, a brand can only move forward for so long on just its advertising budget and dollar-menu offerings, as McDonald's has found out in the past few years.
That is the long answer to your questions.
The short one is that Quiznos has exhibited virtually no ability whatsoever to understand what engages the consumer and wherein lies the consumers' expectations for the category. And Sbarro has for so long relied on pure traffic to keep them alive, that all they've come to stand for is "pizza" and not very good pizza at that.