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Log In / Register | Mar 14, 2010

Quiznos to Reduce Sub Prices, Offer Free Sandwiches

Oscar P Hoot's picture

HEARD ON THE STREET – Rumor has it that Quiznos franchise owners, many struggling in even a good economy to reach profitability, are grumbling that the head office is requiring a significant decrease in the price of what store owners can charge for many sub sandwiches. Not only does that mean less margins on their most profitable items but prices are also coming down without also reducing food costs. For example, the large premium steak subs will go from $9.99 to $7.49. Yet cost structures for the shop and sandwiches will remain roughly the same. 

"Na-ah," says the head office. In local marketing meetings, Quiznos has argued with owners that the chain actually is reducing costs by slightly trimming meat portions for the cheaper sandwiches. Its master franchise in Canada pioneered the reduced prices and saw an increase in customers. Some franchise owners reply that the increase in customers did not last long and wasn't worth the erosion in price. Once cut, it is anticipated that sub sandwich prices will take considerable time to bring back.

Bringing its sandwich prices more in line with the competition is a sign that Quiznos is trying to maintain market share. Domino's Pizza and Arby's have recently entered this sector with their under $5 toasted sub sandwiches.

In January, the sub chain plans to blitz the market with a buy one sandwich get one free coupon. Franchise owners need to mail in the coupon, and the store owners will be paid $0.75 per coupon, up to $300 when Quiznos Corp. gets around to processing those rebates.

It's a tough market out there.

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A friend's child works at a by Guest

A friend's child works at a quiznos and I can tell you that they are told to cut back on the quantity of ingredients on the product when a coupon is presented.  They must short the meats and the cheese.  The owners have video cameras watching the employees work to make sure that they are not giving the full amount of product.  Great way to get a introduction to the product.

This has been going on for years and not just because of a bad economy.

quiznos by Guest
Franchising surely will suck the life out of you. Its a lot of money to invest to buy yourself a low paying job, one that you may not even be allowed to keep, if your franchisor is a rogue. 35K is a dream income,and you may be lucky to get that, trust me.... the cost will be a 24/7 life within the 4 walls of your business if you are to survive.Franchisors are great at selling the dream, but deliver nothing like what one expects. Look at the franchsing disasters in Australia where inadequate laws and a weak regulator have allowed rogue operators to run over weaker parties to the franchise agreements, deceiving and misleading consumers to purchase into sinking ships. So many franchisors are folding and dragging down their own networks. a great source of information is http://bdlies.wordpress.com formerly known as bakersdelightlies or google cheesecakeshoplies and then there is more Canadian blogger has set up http://jefflefler.com.wordpress.com and unhappyfranchisee.com all these websites serve to warn of franchise catastrophy.
I think they are really worried and they are doing something! by Guest
I think they are trying hard not to end up like Boston Market. It is winter and a lot of snow and cold so we will see how this program worked in a month when it has 2 months of history and track record. I think the problem is that the sales are so low that without the food company rebates the corporate wont be able to support their payroll and operational costs so the food distributors are using this fact against the corporate and raise food prices.... but the strategy to increase sales so eventually it results in more sales and higher Net3s means more royalty fees so they would be able to afford and work on the money that they make from stores sales so then and only then they can be in the position to tell the food distributors to listen to them and if they don't they will be replaced... so thats my belief and think that if the new lower price strategy works, the frequency will increase and the store sales increases. so it will be a good step in rebuilding the company and to get a handle on food and paper costs. And since I am one of the few who is kinda Ok with their strategy this time, that doesn't mean I work for the Q. I simply own one quiznos store and thats it, I work just as hard as all you... which is 6 days a week 10 hour days! I wish all of us success and hope for much better management.
No, Q isn't Boston Market by Granville_Bean
Boston Market had some very good real estate. Many were surprised when Mickey D's actually ran it (for a while) rather than skim the good sites for themselves and flip the rest. I doubt Q has that real estate advantage. OTOH Boston Market was a bubble at the Zor. I had read that a major part of their supposed assets was loans owed them by Zees. So when Zees folded, their loans went poof, kinda like the sub-prime thing. I am an infequent Q customer, not one near me but I stop in when on the road. They NEED some value pricing in the current economy. Can't try to make more & more money from fewer and fewer customers (by raising prices). That leads to a death spiral. VOLUME, they need VOLUME. The trouble with Q around here is lack of critical mass. Thinks it's great to be the only one in the county? Think again. There ae NINE McDs here, and ONE Quiznos. The Q doesn't get good economies of scale on food distribution (one truck to several units, not). The one Q can't afford to mount effective co-op advertising. Whereas (by contrast) all those McDs pull together and saturate the media. Our nearest Q, heard the guy had a job in a mill out of town. He had a For Sale sign on the door of the store. I heard it was $40k OBO. This guy is the 2nd owner, the first guys (2 partners) pulled out after about 2 years.
Q Franchisee Should Close by Guest
I too owned a Quiznos and tried to hang on until I could sell the restaurant by taking a fulltime, outside job. It doesn't work. Try working a 40 hour a week job and then the restaurant during your "off" hours and see how long you last. See how well the restaurant runs with the $7 an hour help running the store. Watch the food costs skyrocket and sales fall even lower. You get to the point where the value is so low you can't GIVE the restaurant away. Speaking from personal experience that guy should close it before it kills him. Quiznos sucks.
Like the product but can't make money by Granville_Bean
As a customer I like the Quiznos sandwiches (though I always remark on how expensive they are even though our family has an above average income). Too bad most folks can't manage to make money selling them. The problem is that the pricies are on the high end for the regular working man, but if you try to appeal to the high end it is still a sub in a "fast food" kind of environment. If you wanna go high end maybe there could be a handful in the whole country in particularly upscale places, "Quiznos of Beverly Hills". And/or it could be a table service "concept". For mass market it needs some lower prices. Doesn't have to be lower for everything but maybe a tiered menu with Value Meals for Joe Sixpack and then the higher stuff for the Snotty Yuppies. Anyway, to the guy who had one and had to take another job to make a living, sorry for your loss.
Quiznos stores now at 4200 by Guest
Q franchisees would like to offer lower cost sandwiches but the problem is that Q mandates the lower price without any kind of reduction on the food, paper, and supply cost. So customers and corporate Q benefit, the franchisee gets screwed. And this isn't a new phenomenon. Franchisees have been forced to eat the discount cost for several years - always being told by the now defunct Q University that agressive discounting pays for itself through increased sales. Of course for many Q's that's a lie. If it did the total number of Quiznos is the US wouldn't be at 4,200 and falling.
What Does a Q Do vs What it "Needs" to Do? by Granville_Bean
What kind of volume does a typical Q do? And what kind of volume would a Q have to do to be profitable (or at least make a living for the 1-store owner). Like the average U.S. McD does $2.2M but (these are generalizations) an McD can do okay at anything above about $1.8M. $1.4-$1.6M is low volume for a McD and any full store that can't do at least that much, the Zee likely would rather close it. It would be bad if what a Q "needs" to do is more than what the typical one does. And while we're at it, what would a typical vs. target Food Cost be for a Q? Thanks!
Re: What Does a Q Do vs What it "Needs" to Do? by John Q Public
Granville_Bean, That is a tough question to answer since 'in the quiznos world' the breakeven is a moving target. When I first opened my store (Over 8 years ago) my break even was about $650.00 per day. Unfortunately when they began developing sandwiches with a 40% food cost (before discounts) as well as began marking up foods through AFD, the BE point never recovered. What Quiznos needed to do was lower our food costs so the franchise owners can be more competitive with our rivals while still maintaining some possitive cash flow for FO's. But that remains to be only a dream.
Re: What Does a Q Do vs What it "Needs" to Do? by Guest
Sales, about $4000 to $6000 per week. Break even, about $4000 to $6000 per week. Less than 10% of ZOR's are in the black. Those that are work 60 to 90 hours per week and average about $35K/yr.
I think ya meant Zees (only way it makes sense) by Granville_Bean
So I stopped in the local Q. Yup, sign on the door saying "$40,000 OBO". Also says MUST RELOCATE. The teen girl behind the coutner turned out to be the Owner's daughter. She says they are closing this month regardless of if anyone buys it. Apparently they are losing their lease anyway (MUST RELOCATE). The Owner had been quoted in the newspaper as saying his rent was $4,000/mo and he couldn't afford to stay there at that rent. It seems like a good location, out in front of the Walmart and Home Depot, next to Taco Bell. They have good visibility right where people turn the corner on to the access road. So if it is a MUST RELOCATE what would a buyer be gettting, some used restaurant equipment? I did see that they DO have a lower price teir, just hadn't heard about it. Some $1.99 snack sized little round toasted things, and some Everyday Value sandwiches at $3.49. Oh well. Too bad for this family business. The Daughter said something about her Dad had talked to another Zee in the next state over (closest Q) who said they were making good money but then that guy couldn't take the stress, or maybe it was her Dad, I'm not sure I caught it right. Like I said, too bad for these folks. Restaurants tend to become a 24/7 thing anyway, lots of burnout, and not just franchised places. We sometimes find ourselves working 7 days even though we don't "have to" (as multi-operators we have a salaried management team) because there is always something to do, or to be done better. However, I have owned businesses before and that's kind of how it was before too, so can't blame that on franchises.
$35,000 now adays is nothing by Barbara Jorgensen
Barbara Jorgensen's picture

Work endless hours for $35,000 and have no benefits and no life with your family.  What a deal.  You can't be serious. 

If less than 10% are in the black that means they are taking advantage of their zees.  Give me a break.  Your zees are working many hours while you get to take advantage of the hard working people of our great country. LOL

Where do you get your information by Barbara Jorgensen
Barbara Jorgensen's picture
Just because you say less than 10% of Zor's are in the black doesn't make sense. Do you know more than most of us?  Are they are  in the black because of taking advantage of their zees that they know when to start gouging and insisting they have to sell sandwiches for pay for one and get one free?  Do they really care about their zees? 
Confused guest by Darnelle White
Darnelle White's picture
I think the guest meant to say less than 10% of Q Zees are in the black, but became confused and wrote Zors. Guests need to understand that they have no identity and no credibility when they write here. They are anonymous. That's why if a guest makes any sort of claim, they have the additional burden of backing it up with an outside source or else it will be assumed untrue.
Re: Quiznos to Reduce Sub Prices, Offer Free Sandwiches by Guest
Here we go again. Q is desperate and needs to move food at any cost - even if it means sacrificing more stores like it did last time (and the times before that). This "new" idea of lower prices would be good if Q had already addressed our operational costs, but after YEARS of NO ACTION it's obvious they DON'T KNOW HOW. Now that they actually own a couple stores (what a concept!) maybe they'll figure it out. Story is simple, Q began as an upscale sub shop, got greedy/stupid and placed lots of stores in lowscale areas to compete with the Walmart of the sub business (Subway). Bad decision when cost & pricing structure is very high and store throughput capacity is low. The concept is designed for low quantity/high quality, not high quantity/high quality. Only way out now is: 1. Enlarge territories for some stores by forcing others stores to fail. Hey! This plan to lower prices oughta' do the trick! 2. Rework menu & operational costs and turn us into Subways. You may ask "why not work with Q, let them hear your ideas and get this thing turned around?" Trust me. Writing/talking/begging with Q is the biggest waste of time and energy ever. After YEARS in the chain I've learned one hard lesson - Q won't solve your problems. You have to solve them yourself even if that means breaking the rules. My view - by this time in 2010 Q should be just about gone. They're simply too ****** to be in business.
Re: Re: Quiznos to Reduce Sub Prices, Offer Free Sandwiches by Guest
What a pity. Q had such nice products. Now they must "tweak" them in order lower prices. I wonder if the customers will see less food for less price as "value". If only Q had chosen to create a win-win relationship with their franchisees they wouldn't be in their current financial mess. As it is very few franchisees care anymore. Very few work their stores themselves. Most have gotten day jobs to keep food on the table. This is very bad as the stores are designed to be owner operated. The one-sided financial relationship with Q means the stores can't generate enough money to support the owners or even a manager. As a result the customer experience suffers, the restaurants are dirty and prices are high. The competitive "value" is terrible. Yes. Q knows how to use the law and their lawyers to always come out on top, but they have failed to see this is the very cause of their undoing and the ultimate failure of the chain. Smarter chains will prevail - those that listen to and work with and not against their franchisees.
Re: Re: Quiznos to Reduce Sub Prices, Offer Free Sandwiches by Guest
I think you are probably right. By this time in 2010, Q may be just about gone in the US. They have been able to grow their visibility in the economy my "screwing" their franchisees through encroaching and churning. Their visibility has implied viability to new franchisees and the courts uphold the malicious contracts. It will be interesting to see what happens if the big "securitization" Quiznos negotiated starts to get in trouble. Will Quiznos stiff their creditors and recorganize under bankruptcy, or what? They seem to be experts at using the law to achieve their ends. Yesterday, I saw a piece on TV where a Private Equity Firm who apparently own the Archway Brand under a securitization deal reopened an Archway factory and put the workers back to work. Maybe they will be better and smarter employers who will have an incentive to make Archway survive so that their investment survives?
Re:Re: Re: Quiznos to Reduce Sub Prices, Offer Free Sandwiches by maddog
Guest wrote: "Will Quiznos stiff their creditors and reorganize under bankruptcy, or what?" You are damn right - Q will screw anybody and everybody to achieve their financial goals. Like the earlier poster said, the owners that will survive are the ones that will break all the rules. The ones that follow the "low menu prices" rules, will get slaughtered. I see a massive revolt building - as this time around Q has gone out of bounds.
Quiznos to Reduce Sub Prices by owner
It is a shame that owners in Canada have not awoken to the realization that together we all carry some cloat. I think you are right and those who break the rules are the ones who will be left standing and finally have an opportunity to make something of their business when Q goes bust.
"securitization" by scotty
Could someone please give a little color on this? Have always known that Q put their own bank accounts first. But lately it seems they're desperate to add money to their coffers. They're so much more aggressive about taking money from food/operations/franchisees. Take the money now and think about the impacts later. Money is always the motivating factor...and they wont think twice about how they get it. Each strategy puts them deeper in trouble. The motivating factor is the "securitization" IMO. At all costs...grow cash flow and grow profit for themselves at all costs. This time around could damage things beyond repair. The majority of Q's arnt making it to begin with. On a side note: This Canada slide show is funny. It's all BS. I remember the street teams in Omaha that doubled revenues for all the stores. Q was pumping delivery at the time. It's always a sales show.
Not possible by Guest
Quiznos can only offer suggested pricing guidleines. They cannot dictate what prices the franchisee owned stores can charge. Of course, they can make life hard for franchisees that do not change prices, but Is uspect their franchisees don't care and WANT the Zor to take their stores.
Re: Not possible by Guest
Q has no intention of taking possession of the stores. Not even to fire sell them to the new and naive. They would have to pay off all the back taxes and debts first. Q knows it's a losing proposition ripe for potential litigation.
Check out the facts first by Guest
I know first hand that this strategy was successful in Canada over a long period of time. It was first tested in one region, than rolled out to all Canadian stores. Both the revenue and profitability improved dramatically across the board. I no longer own any stores, but I would be taking a hard look at this before I dismissed it out of hand. Quiznos must figure out a way to compete on price with the big boys or they face extinction. Doing nothing in this market is a sure road to failure. Quiznos corporate is quite aware that they must find a solution to the current trends. This program has been developed and tested over a long period of time. I was aware of it starting in test 2 years ago, and they have been very careful to let it run it's course. This is a major shift for the entire brand, and will certainly be supported by substantial marketing in the coming months and next year. For the sake of all of the owners and the brand overall. The competition is hoping otherwise. Dominoes has set a goal to deliver 1,000 sandwiches a week per store in 2009. That is probably more than the average Quiznos sells on a weekly basis. A close friend of mine owns over 55 stores, and he is doing very well with sandwich delivery. McDonalds tested sandwiches in Canada, and from what I know they did pretty well. It is certainly possible that they will run the same test in the US. 7-11 has introduced a line of agressively priced quality sandwiches made daily. The competition will be agressively moving forward. Quiznos must take the lead or get left behind forever.
Check out the facts first by Homer
Is that you Greg? You know very well that the test market in Ottawa, London and Burlington was a resounding failure. Even using national advertising budgets to push this program it was still not enough for owners to break even.
Re: Check out the facts first by maddog
Guest wrote: "Quiznos must take the lead or get left behind forever." The only thing Q does aggressively is take money from franchise owners pockets and put in their own pockets. BTW; what is your position at Denver HQ ? Q makes the majority of their income (estimated to be 70%+ of their profits) from selling overpriced goods and services to their franchise owners. You can only choke the chicken for so long, before it's on a death bed. When the chicken dies, so will you in short order .........
Quiznos Free Sandwiches and Quick Service Saturation by Guest
The fast food market is SATURATED and the blood of franchisees who will fail because of saturation of markets and the recession will continue to be shed. Coupons and give aways are a means of the franchisors competing with each other for market share but there is no proof that this helps the franchisees. If franchisors in the same sector had to compete for franchisee cheqp labor and capital, the bloodshed would not be as great. LET THE BUYER BEWARE. As Richard Solomon has said, "if you want to open a little fast food restaurant or any kind of a restaurant, be clever and do it as an independent and get yourself a "good guy lease" -----this market is saturated and about to be skinnied down.
Re: Check out the facts first by maddog
I did - called a few Canadian franchise owners, and they refuted all the revenue, profit & cash flow claims being made by Q corporate here in the US. Any other suggestions ...... ?
Facts by michael webster
michael webster's picture

Guest writes: "I know first hand that this strategy was successful in Canada over a long period of time. It was first tested in one region, than rolled out to all Canadian stores. Both the revenue and profitability improved dramatically across the board. I no longer own any stores, but I would be taking a hard look at this before I dismissed it out of hand."

So where is the management study that supports your view? 

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Facts by Homer
I know for a fact that this strategy was unsuccesfful in Canada. Owners in the test area are overworked and losing money everyday with this nonsense. FACT!
Quiznos Price Cuts by John Q Public
Michael, We franchisees have been asking for backup to support their claims for years now. Other than the normal puffery, they have none. ....and the hits from corporate just keep coming.
Re: Quiznos to Reduce Sub Prices, Offer Free Sandwiches by Guest
Very interesting corporate startegy by the Q. I am confident that management calculated the increase in customer counts to offset the price reduction - LOL! Once again, pain at the pump, err, counter for the owners. Been there as a franchisee and corporate employee. Sorry, don't miss being taken advantage of by the Q. Happy Holidays!
Re: Re: Quiznos to Reduce Sub Prices, Offer Free Sandwiches by maddog
Guest wrote: "Been there as a franchisee and corporate employee." Thank you for your validation from an insiders perspective.
Re: Quiznos to Reduce Sub Prices, Offer Free Sandwiches by maddog
Sorry - Quiznos cannot reduce sub prices, as they do NOT own and operate more than three stores, out of 4,500+ locations. If they start paying a portion of my rent and payroll, I will comply with the pricing suggestions - otherwise no dice! These are desperate measures on corporates part, which will drive many more stores out of business. And then, who will they sell their overpriced food & paper products to ........ ?
Price Reductions by PA Owner (Unfortunately)
First thought. You are right, they can only suggest. I still suggest that EVERY Quiznos owner stop royalty/supposed advertising payments for a month. It will help your cash flow, have an impact on Quiznos and if they take this piece of garbage franchise who cares. I am trying to get them to do so and I will have my manager open up a local sandwich shop. Second thought. Everyone should write a Merry Christmas email to Brenneman and Deno. Since the start of their regime the ONLY thing that has changed is that revenues have gone DOWN.
Re: Price Reductions by Guest
Quiznos tried the Real Deal and $5 large Subs to compete on price and it never got traction. Even if this deal were to work and stores returned to profitability, it would only be a signal to corporate to open another Quiznos in your back yard. The transaction problem has a lot to do with encroachment, plain and simple.
Re: Re: Price Reductions by Guest
Competing on price is a fools game that no one wins. You can call it a "value adjustment", but it's still price.
Re: Re: Price Reductions by maddog
This deal is NOT going to work - you know it, I know it & the schemers in Denver know it ! As for encroachment, those days are over, as the word on Q is seriously out - with potential buyers, lenders and even Q's competitors. The only hope for survival of stores is to follow their own menu pricing, based on local demographics and local competition.
Price Reductins Etc by Martin Tate
First I have a question. Does anyone know what the menu for a corporate Quiznos operations looks like? I have heard it is scaled back from a franchisee owned store. I would like to mimic it so I could try to get my costs down. As for the coupons/reductions. I agree with all the posts. It is not going to work just like the other promos and delivery. Just another way for corporate to take money from our pockets until we go bankrupt. I still say we all band together and stop pay their weekly withdrawls. That would get their attention.
Corporate Menu by Guest
Their traditional location has a full menu - everything that you have, they have. The only ones that have abreviated menus are the non-traditional locations in the Denver Airport.
Royalty Strike is bad idea by Paul Steinberg
Paul Steinberg's picture

"MartinTate (not verified)" wrote:  I still say we all band together and stop pay their weekly withdrawls. That would get their attention.

t this very moment, BMM has a cover story about another zee who stopped paying royalties but kept using the trade dress.

Long story short:

You can't use the brand name and trade dress and other intellectual property of the franchisor unless you are paying your royalties.

Not what you want to hear, but the law is very clear on this point.

If you are serious about taking action, there are several law firms which have experience dealing with this type of situation, and one well-known firm in New Jersey which has litigated against Quizno's for years. There is also the franchisee association.

You have options, but a royalty strike is a bad idea even when the franchisor is not living up to its obligations.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400


Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400
On the other hand ... by michael webster
michael webster's picture

If you wanted to persuade your local politician that allowing royalty strikes was a necessary feature of franchise life, then ...

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"