The first installment in our brand-new retrospective series, exploring the history behind the franchise industry’s most recognizable concepts
Words by Kieran McLoone, deputy editor for Global Franchise
Remember Quiznos? If you’re of a certain age, then you’ll certainly have heard of the classic sandwich brand – whether that’s because of its downright bizarre ‘Spongmonkeys’ advertising campaign, its pioneering of the premium toasted sandwich franchise, or its gradual fall from a QSR frontrunner to a brand in need of a considerable relaunch.
At one point in the early 2000s, Quiznos had it all. Franchisees were signing up in the hundreds, and by 2007 it had over 4,700 U.S. locations, with more than 5,000 worldwide.
Only Subway edged ahead, and Quiznos’ allegedly superior quality (albeit quality that came with a heftier price tag) was elevating the franchise network to unforeseen heights.
So how did the brand go from all that to just under 500 global sites? And what does the future look like for Quiznos, following the acquisition of the brand by REGO Restaurant Group in 2018? We spoke to some industry insiders, and REGO themselves, to understand the revealing journey behind this fascinating franchising case study.
Hopeful overseas beginnings
The year is 2001, and Quiznos has just launched in Europe. Opening its first U.K. site in Peterborough, Quiznos has now been operating under father-and-son duo Rick and Richard Shaden for a decade.
Its global footprint has gone from strength to strength, and franchisees the world over are starting to recognize the potential that could come from aligning themselves with the Quiznos name.
This includes ex-franchisees like Mo Pandoria, who launched his first Quiznos site in Birmingham, England in 2001.
“Prior to joining Quiznos, my brother and I were in the telecom industry. At that time, we decided to find a side business to make additional income,” says Pandoria. “My brother was gungho about Quiznos; he had gone to their restaurants and thought the sandwiches were great. He couldn’t stop talking about it.”
After an extensive training program offered by Quiznos, Pandoria opened the Birmingham site and his brother launched another location across the Atlantic, in Charlotte, North Carolina. At first, things were promising, but Pandoria soon learned that his site was going to look a little different from those across the pond.
“Brand awareness and marketing were tough. In the States, Quiznos was this crazy brand that everybody knew. It was coming up to be just as popular as McDonald’s or Burger King. In the U.K., it was unknown. There were probably two or three locations open, but nobody knew about it. They couldn’t even pronounce the name in the U.K.”
It wasn’t just brand awareness that Pandoria struggled with when trying to get his U.K. site off the ground. Despite his location opening in Birmingham city center – a prime location, by all accounts – he was soon hit with unprecedented competition: the Bullring & Grand Central shopping center opened in 2003.
“At that time, the Bullring was the biggest shopping center in all of Europe. So when that opened, lots of major brands entered it and everybody on the high streets started suffering.”
One year later, Pandoria states that Quiznos made success even more challenging, by opening two other units just mere minutes from his location – and closer to the Bullring. Things began to look dire; a reality reportedly faced by many Quiznos franchisees as the brand’s name grew and grew.
“When you’re a new franchisee, you’re thinking that the brand is going to support you and they’re looking out for your best interests. So when they opened up these other locations, we approached them and said that they were way too close to us,” Pandoria explains.
“They said: ‘well because the daily population in this area is X amount, we can do it. It’s not going to affect you.’ But it really, really did. That was when I realized I wasn’t going to get the support I needed from Quiznos. When I started to realize that, I knew I’d have to exit the business.”
“In the States, Quiznos was this crazy brand that everybody knew. It was coming up to be just as popular as McDonald’s or Burger King”
The shrinking bottom-line
A cannibalizing of its high-profile locations is just one of several reasons that could explain the reduction of Quiznos’ footprint. Another key challenge that franchisees came up against was the creation of American Food Distributors: a subsidiary of the brand that Quiznos used to supply its franchisees with produce – at an allegedly tricky mark-up.
“As a franchisor today, I know that the success of a franchise is from unit economics,” says Pandoria, who is now the CEO of self-care brand Idolize Brows & Beauty. “It’s all about how the franchisee does, and if they’re profiting. If they’re not making money, then what’s the point in having a franchise?”
As the bottom line shrunk for many owners like Pandoria (with revenues of around $400,000 per year in 2006), American Food Distributors reportedly took in $500m. By this point, the writing was on the wall: things had to change, or Quiznos would fade into obscurity.
Unfortunately, the brand instead launched ill-advised promotions like free sandwich coupons; incentives that would see franchisees take a further financial hit. This, inevitably, led to more and more individuals leaving the network, with a reported 1,000 stores closing between 2007 and 2009.
“You have good franchisees leaving the system, and when they’d leave they would sell off their store to whoever would buy it – oftentimes, that’s a trade down. Those franchisees would then realize that this isn’t as good as they thought, so it continues trading down,” says Dan Rowe, CEO of development consultancy Fransmart, and a long-time F&B professional who has been familiar with the Quiznos story since its launch in Denver.
“It’s just a classic story. You forget the number one rule of franchising: a franchisor is only going to get wealthy if its franchisees are successful. You get rich by helping people get rich. It does not work the other way around.”
A much-needed lifeline
Then came the 2010s, which were a strange time for Quiznos. With more franchisees leaving the network, and the world slowly recovering from a major recession, the brand began looking for ways to remain relevant in a shifting consumer landscape.
In 2015, a year after filing for bankruptcy, Quiznos launched the Quiznos Grill Concept. This was met with middling reviews and was swiftly ditched in 2016. Jump forward just a couple of years, though, and suddenly there was a potential light at the end of the tunnel.
Enter, REGO Restaurant Group. An organization created to reinvigorate iconic brands, REGO acquired Quiznos alongside Taco Del Mar in June 2018. It soon initiated something of a ‘revolutionary process’, which meant reexamining the brand and seeing where changes could be made.
As well as bringing in new equipment like flat-top grills and fryers to expand Quiznos’ menu, these changes were centered around franchisee satisfaction. Namely, putting the interests of its network at the forefront of future strategy – something that ex-partners like Pandoria were eager for many years prior.
“One of the biggest changes is that we are a franchisor that cares about the franchisees’ economic model, meaning we place a great deal of emphasis on programs that benefit our franchisees and help grow their bottom line”, says Tim Casey, CEO of REGO Restaurant Group.
“We have and will continue to create centers of excellence and a shared service support model, comprised of talented individuals across a wide array of functional departments designed to support our franchisees and to provide our franchisees with a strong economic model.”
One of the most obvious changes that REGO has enacted is an update of the Quiznos look and feel, which includes an update to the brand’s logo for the first time in two decades.
“The rebrand is a signal and a promise of change and evolution, and we look forward to fulfilling this promise for both our franchisees and our loyal consumers,” says Casey.
“It’s all about how the franchisee does, and if they’re profiting. If they’re not making money, then what’s the point in having a franchise?”
The future looks bright
While we may never see Quiznos return to the thousands of locations that it once occupied, REGO’s involvement could return the brand to at least some position of its former glory. Current interest is promising, at least: in February 2020, it signed a 20-store development deal in Latin America, with locations planned for Costa Rica, Honduras, Panama, Nicaragua, and El Salvador.
It’s not worth solely focusing on the failures of a franchise brand, but examining the Quiznos journey can provide some invaluable lessons for emerging franchisors currently on their own growth trajectories.
“I watched Quiznos take off like a meteor and it was awesome,” says Dan Rowe. “Subway proved the model and built this foundation that you could have a chain of sub shops around North America and then the wider world. Quiznos came out with the more premium version of that; there’s always room for a person to do the next big thing. That’s why fast-casual happened in the first place: the world was showing us that there are enough people willing to pay more for a premium experience.”