PROBLEM SOLUTIONS
Quiznos Problem Identification
PHL/320
July 26, 2017
Alexander Cardenas
Quiznos Problem Identification
We have conducted a research on the Chain of restaurants called Quiznos. After careful research, we have identified several business problems. Employing critical thinking in our research and identifying problems has enabled us to discuss how to develop potential solutions.
The Quiznos franchise was once an empire of over 5,000 locations world-wide. I was originally created in Denver, Colorado but quickly branched out franchises all over the country and eventually overseas. Quiznos was once the number three submarine sandwich franchise in the world. During the years of the great recession Quiznos closed nearly 2,000 locations blaming the economy and the steep competition. After the closing, nearly 2,000 restaurants during the Great Recession. Most of the company was purchased by Avenue Capital Group of New York in January 2012. The purchase was done in "a deal that eliminated about one-third of the company’s $900 million debt and injected about $150 million cash into the company. After Avenue Capital Group bought Quiznos they bought in turnaround specialist Harsha V. Agadi as Quiznos executive chairman. They also brought on Stuart Mathis as CEO; the former president of The UPS Store. They quickly came up with the idea reverse the shrinking sales of Quiznos. They decided to promote the quality of their food. On March 2014 Quiznos filed for chapter 11 bankruptcy, but four months later it emerged from bankruptcy and reduced its debt by $400 million.
Quiznos Problem Identification
Quiznos is also widely criticized for grown too fast to the actual demand of its product and not considering the competition. The product they offer is not hard to mimic and the competitors are often offering better prices. Although Quiznos has introduced, catering, salads, soups and their toasted subs they are still considered to be slightly higher priced then their competition. Another issue that has been plaguing Quiznos is that it has gone through an immense amount of civil litigation due to internal matters pertaining to franchisees. Quiznos has been sued for collecting franchise fees but not allowing franchisers to open establishments. It has also gotten bad media reputation due to a franchise committing suicide and leaving a note blaming his suicide to the mistreatment from Quiznos. To add to the Quiznos problems franchisees are also at discontent because they are bounded by contract to purchase all their goods from the Quiznos franchise. Their main complaint is they are being sold many items at a much higher cost than they can purchase at other stores. To make matters worse, franchisees are still required to pay a 4% advertising fee a 1% market fee and a 7% royalties fee.
Based on the research it seems that Quiznos has had an uphill battle from the beginning. It has had to compete against well-established franchises like Jimmy Johns, Fire House Subs and the behemoth Subway. It is easily identifiable that the problems that Quiznos has encountered are not a quick fix. All the problems consist from a lot of different aspects of the franchise. We can start at the prices of Quiznos subs and how competitors are offering the same quality subs for less money. A other thing that Quiznos is yet to tap into is offering a breakfast menu. So as the competition is finding ways to tap into the market Quiznos appears to be standing stagnant. Franchise fees and mandated purchasing from Quiznos is also a major setback for the company,
Quiznos Problem Identification
not only has it cause grievance with franchisees it has also caused Quiznos to get sued as a class action lawsuit which cost Quiznos over $200 million. All these issues and the average net income of Quiznos being under $30,000 is not very appealing to investors. As of now Quiznos has hired a new CEO and they have vowed to re vamp their entire marketing strategy. Many of the new ideas sound logical and can possibly appeal to the newer generation. But it may just be a little too late. The Quiznos franchise has been in disarray for many years now and this change may have just showed up a little too late.
References:
https://www.forbes.com/sites/karstenstrauss/2015/06/17/is-quiznos-toast/#219d5b1822cd
https://prezi.com/sduwvumga2du/quiznos-new-marketing-strategy/
https://phoenix.vitalsource.com/#/books/1259952487/cfi/6/32!/4/4/2/2/4@0:0
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