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Quiznos New Strategy: Higher Prices

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Quiznos chief executive Greg McDonald has come up with a new marketing maneuver to beat competitors. Get rid of the $3 Sammies and the $4 Torpedoes and replace them with upscale items for $7 or $8.His plan of attack,

It's all about going back to Quiznos' heritage — high-quality, good-tasting food.

The Denver Post reported yesterday that in rebuilding its sales and recovering from “years of malaise”, Quiznos is doing away with its “value” items in favor of more expensive ingredients.

Higher prices are more than just a necessity to support costlier ingredients. With prices now consistently pegged at 10 percent higher than Subway and some other competitors, it sends a message to consumers, MacDonald said, about the chain's new thrust toward tastier food.

But opinions vary on whether this new approach will turn around performance and fix the lingering animosity from struggling franchisees.

They're looking to work it through and stop the bleeding in a very strong and competitive industry," said Darren Tristano, a restaurant analyst and executive vice president at Chicago-based Technomic. "I sense that many franchisees feel that this is a step in the right direction but with inherent risks.

With restaurants plummeting from 5,125 to last year’s 2,800, and sales falling by more than half, market share has dropped steadily.

From 2010 to 2011, its share fell from 4.9 percent to 3.8 percent. At the same time, industry giant Subway grew from 45.8 percent to 47.3 percent, according to Technomic.

The Denver Post report states that the Quiznos Franchisee Association issued a “sobering memo” recently to its members after its meeting with owner Avenue Capital executives and Quiznos management team.

We clearly communicated to all parties at the meeting the true sense of urgency that is currently at hand for franchise owners, and the need for serious change ASAP that directly relates to our bottom-line profitability. We made it clear that immediate change and relief was needed to keep a large wave of stores from closing in the very near future.

New Jersey attorney Justin Klein, who represented the franchisees through class-action lawsuits in recent years commented.

There are folks out there still struggling. They’ve had a very rough time for an extended period of time. I think it will take more than a couple of years for improvements to be felt.

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About Janet Sparks

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Public Profile

Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at jsparks@bluemaumau.org or at 303-799-7398.