News

Quiznos reportedly seeking bankruptcy protection

February 28, 2014

Quiznos is reportedly prepping for bankruptcy amidst amassing debt and store closures. Sources told the Wall Street Journal this week that the Denver-based sandwich chain has been navigating a tense relationship with franchisees on top of its $570 million debt, and is working on a restructuring plan.

In December, Quiznos missed a loan payment and began negotiations to restructure some of its debt with creditors.

The chain embarked upon a turnaround effort nearly two years ago, but has continued to struggle. Among its hurdles is a tension-filled relationship with franchisees, many of whom have accused the company of requiring them to buy food from a subsidiary they say inflates prices.

Darren Tristano, EVP at Technomic, told the WSJ that Quiznos collects 7 percent in royalty fees and another 4 percent for advertising from its franchisees. The industry average is 6 and 2 percent, respectively.

In a memo sent to franchisees in December, CEO Stuart Mathis said a forbearance agreement with creditors has been designed to give the chain more time to reach a deal.

Quiznos had about 5,000 units in 2008. It currently has about 2,100 restaurants, of which 1,500 are in the U.S. Hundreds more domestic units could close this year.