Quiznos Files for Bankruptcy on the Heels of Sbarro
Quiznos followed in the footsteps of pizza chain Sbarro, Inc. on Friday, filing for Chapter 11 bankruptcy. The Denver-based toasted sandwich chain is suffering, like many fast-food restaurants from a shrinking market, and stiffening competition amongst its remaining rivals, the Washington Post reports.
“It’s survival of the fittest,” said Bob Goldwin, executive vice president of restaurant researcher Technomic, Inc., in a phone interview with the Washington Post. “The market is not growing, or it’s barely growing, so the weak players are going to get weeded out.”
Quiznos filed for bankruptcy after reaching a deal to cut its debt by more than $400 million, or roughly two-thirds; the company has said it will continue operating despite its filing and is planning to move forward on a debt-restructuring plan, as well as taking steps to make operational improvements.
“The actions we are taking are intended to enable Quiznos to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners,” Stuart Mathis, Quiznos Chief Executive, said on Friday at the time of the filing, per The Wall Street Journal.
News of Quiznos’s last-ditch restructuring effort comes on the heels of similar news from its competitor, Sbarro, just a few days prior; the pizza chain filed for bankruptcy on March 10; Hot Dog on a Stick did the same just last month. Newer casual restaurants, particularly those that emphasize the freshness or healthfulness of their food are becoming more popular.
Competitors like Panera Bread Co., Chipotle Mexican Grill, and Subway, the Washington Post reports, are cutting into the business of rivals, like Sbarro and Quiznos, which aren’t keeping up. Subway, a chain at the lower-end of the fast-casual market, is doing so well, in fact, that it apparently has plans to add another 10,000 restaurants in the next four years, the The Huffington Post reported Friday.
Restaurant researcher Bob Goldwin added that there were a number of flaws in Quizno’s original strategy. “They expanded too fast, they had a weak franchise network,” he told the Washington Post. “Once the Paneras of the world came along, I think, many consumers thought it was a better quality at a better price point. And Subway came in on the lower end and aggressively promoted themselves as fresh.”
In an article regarding the Sbarro filing this past week, the New York Times claims part of the pizza chain’s downfall is due to its choice of location: Other fast-casual restaurants, such as Panera and Chipotle, are “less exposed to the epic decline in foot traffic in the nation’s malls. As people do more shopping online, fewer are visiting the mall — and more seem to be putting a bit more thought into their food,” it concluded.
Similarly, Quiznos opted for higher-priced locations which demanded higher rent, in order to set themselves apart from the lower-priced Subway, a move which may have contributed to its slide into bankruptcy, the Huffington Post speculates.