This Once-Popular Sandwich Chain Is on a Steep Decline
Once among the three largest sandwich chains in the country, Quiznos has been on a steady decline for over a decade. The birthplace of toasted subs has lost a staggering number of locations during that time, with the pandemic causing an even steeper fall in sales and unit count. Now, the company is expanding into ghost kitchens in a new attempt to save itself from disappearing.
Quiznos currently operates only 255 U.S. locations and over 300 international ones, according to Restaurant Business. That's a far cry from the 800 stores the company had in 2019, and an even farther one from the footprint of 5,000 locations it had in its heyday in 2007. In fact, the number of Quiznos restaurants in the United States has declined by 94% in 15 years.
To put it into a financial perspective, Quiznos reached a high of $1.9 billion in systemwide sales in 2007. Today, after a difficult pandemic year that decreased its already dwindling sales by another 22.5%, the chain generates less than $100 million a year in sales across all its stores.
Experts cite several reasons as to why the chain has had such an epic fall from grace. For one, while its toasted sandwiches may have been a novelty when they were first introduced some 40 years ago, the competition in hot subs has since grown drastically. Subway was one competitor that began toasting sandwiches in 2005 and was also beating Quiznos with prices of their $5 footlong deals.
But Subway and Quiznos stories are actually similar in one detrimental way—both chains chased a rapid expansion at the expense of their franchisees. Just like its rival, Quiznos was onboarding thousands of inexperienced franchisees and putting on difficult financial demands which precluded these small operators from making a profit. According to YouTuber Company Man, a large portion of the chain's revenue was made through franchise fees, which are one-time payments new operators make to the company, so a rapid expansion directly benefited the corporate bottom line.
Another major source of profit for Quiznos? Selling food and paper products to its franchisees through a subsidiary called American Food Distributors. Operators were forced to buy these supplies at prices far higher than the industry average, while Quiznos directly profited from hiking up the prices.
This amounted to a franchising model that ended up creating a great number of restaurants that were hardly making money, and many disgruntled owners ended up throwing in the towel, causing mass closures.
So what does the future hold for this once-dominant sandwich empire? According to Jonathan Maze of Restaurant Business, the chain's parent company, Rego Restaurant Group, sees a future for the brand in ghost kitchens. Quiznos has penned a deal with Ghost Kitchen Brands that will put its subs into 100 of these takeout and delivery locations across the U.S. and Canada by the end of the year.
Beyond the ghost kitchens, the chain is attempting to reinvent itself with a new restaurant design that includes a drive-thru, as well as new menu categories, according to a recent press release. These moves may provide a lifeline for Quiznos.