Quiznos Management Team Attempts to Answer Questions
DENVER (Blue MauMau) – In light of last week’s surprising announcement that Dave Deno had resigned his position as CEO after a short six-month stint, and that long-term Quiznos investor Richard Schaden was taking over the reins once again, chief legal officer Rich Emmett agreed to get answers to pressing questions from appropriate management team members. Absent from the answers below are those pertaining to its Million Sub Giveaway program, launched while announcing its change in top management. While the questions were being presented to the sub sandwich franchisor last Wednesday, Quiznos was being harshly criticized by franchisees and customers over the handling of this latest marketing debacle.
Questions and Answers:
Has the litigation decreased in the past two years—individual and class action? Do you feel there has been great progress in this area?
Quiznos: Over the past two years Quiznos has made substantial progress in decreasing litigation, effectively reducing the number of individual and class action suits by half. For all parties involved, litigation is a long and tedious process. We look forward to putting all litigation behind us so we can continue to focus our resources on what is really important – our core business of providing a quality product at an outstanding value to consumers.
How many employees does Quiznos have today and how many employees have been terminated in the past three months? What types of employees were mainly laid off? Do you consider that number excessive?
Quiznos: We recently reorganized the company to become leaner and more focused on franchise owners. This move was difficult but will allow us to focus our resources on restaurant operations, marketing and renegotiating leases for our franchise owners. These reductions in force are always tough and impacted good people. We wish them all the very best in the future.
How many members of Quiznos’ management team have resigned or been terminated in the last three months? Have any of them been replaced?
Quiznos: The Quiznos management team has been very stable and is working hard to drive franchisee profitability; however it is normal in the course of business that a few people will have personal situation arise, or receive opportunities elsewhere. Our CEO transition is the most recent example.
Has Richard Schaden, as chairman, been in the background of the company the past two years, allowing the current management team to run the company, or has he been involved in the operations and in decision making?
Quiznos: Rick Schaden has always stayed close to the Quiznos brand as founder and co-chairman. Only very recently has he assumed a more proactive role with the Brand.
What response have you heard from the franchisee community on Rick Schaden coming in as CEO? Also, what response have you had from your Franchise Advisory Council?
Quiznos: Rick has been well-received. He brings unparalleled institutional knowledge and innovation to the organization.
Rick has a long track record of delivering innovative products which drive sales and profits. His track record enabled Quiznos to grow dramatically. Rick’s primary goal is to improve franchise owner profitability.
What will Quiznos’ management team do to help franchisees through this downturn in the economy? Will they cut costs or give franchisees any break on royalty fees?
Quiznos: Quiznos’ major focus is franchisee profitability. Quiznos is focusing on franchisee profitability through, among other things:
- innovation of new products that drive traffic and are profitable
- increased value proposition to consumers
- lease renegotiation program designed to put rent costs into accordance with the current market
Where do you think Quiznos can best spend advertising dollars today? Are you going to expand your marketing or pull away from certain marketing you have now?
Quiznos: We will spend our marketing dollars on the best strategies to connect with consumers.
How many stores are currently opened for business?
Quiznos: Approximately 5,000 globally
How many franchisees does Quiznos have today?
Quiznos: Approximately 4,500
How many stores are sold but not opened (known as SNOs)?
Quiznos: Because Quiznos locations are all private businesses, it is company policy not to disclose this information.
How many Quiznos stores have closed in the past three months? How many have transferred?
Quiznos: Because Quiznos locations are all private businesses, it is company policy not to disclose this information.
How would you describe the financial health of the franchisees as a whole?
Quiznos: (Note: This question was combined with the one below; no separate answer was given.)
What is the financial health of Quiznos and its entities?
Quiznos: In a down economy, the financial health of any organization is going to be more difficult. Quiznos is no exception. We hope our plans for franchisee profitability, including product innovation, lease renegotiation and value propositions for consumers will put us in as strong of a position as possible, given the economy.
What private equity firms are invested in Quiznos? The first was JP Morgan in March 2006 and Greg Brenneman came in under TurnWorks. Today he’s managing director of CCMP—a little confusing.
Quiznos:
- CCMP Capital – Greg Brenneman, Executive Chairman
- TurnWorks, Inc. – Greg Brenneman, Owner
- Consumer Capital Partners (CCP) – Rick Schaden, Owner
Is their any danger that Quiznos will have to face bankruptcy in 2009?
Quiznos: No, none.
What have been Quiznos’ successes in the past two years?
Quiznos: In the past two years, Quiznos has enjoyed success in improving franchisee relations, transforming our menu with new lower prices, introducing new product innovation and lowering food/paper costs.
The Million Dollar Question on the Million Sub Giveaway
Quiznos was asked the following questions:
Will Quiznos reimburse franchisees on the Million Sub Giveaway program? If so, what are the details?
Are you aware of the schemes being used by some customers in getting more than one free sandwich?
Reporter's note: At the time of presenting questions to Quiznos’ management team, Blue MauMau attempted to find out how the company felt the program was going. Franchisees were voicing their opinions on the Million Sub Giveaway promotion saying it was a burden to franchise owners because they were having to foot the bill for the free Internet coupons. Some stated that it was easy for people to figure out ways to get multiple coupons under different email addresses, even though the coupons had a distinctive code. Some complaints stated that not all stores were honoring the coupons and customers were upset to arrive at the store only to be turned away. And another gripe was that unlike the “buy one get one free” promotion, customers participating in this latest promotion were simply picking up their free sandwich without buying any other items.
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Related reading:
- Quiznos CEO Deno Resigns as Schaden Steps Back In
- Quiznos Appoints Dave Deno as Chief Executive Officer and Greg
- Quiznos serves up a turnaround sandwich - Jan. 17, 2008
- Quiznos Franchise Information and Top Franchise Opportunities
- JPMorgan Partners to take large bite of Quiznos - Denver Business
- CCMP Capital -
- Quiznos' founder replaces Dave Deno as CEO- Financial News - Yahoo
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