Quiznos Eyes Growth After Restructuring

Quiznos is aiming for modest growth in 2012 with a new, more efficiently built prototype and more support for franchisees after a restructuring deal that resulted in new ownership and a $150 million injection of cash.

In an interview this week with Nation's Restaurant News, Brian Belmont, Quiznos chief development officer, said the Denver-based sandwich chain plans to open 80 to 100 new domestic units this year, along with another 80 locations in convenience store and other non-traditional locations, a modest step toward growth after several years of unit closures.

"We're growing for tomorrow," Belmont said. "I'd be ecstatic if we opened 100 restaurants in 2012." Last year, the chain opened 176 locations, including about 70 convenience store units.

Belmont said the chain is poised for a comeback after shifting ownership to Avenue Capital Group in a deal that reduced the company's debt and included a $150 million infusion in new equity capital.

As a result, Quiznos will now be able to offer more operational field support to franchisees, he said, as well as contribute to a "good, thoughtful" national media campaign that Belmont said may be similar to Domino's recent brand relaunch.

"Domino's said, ‘Hey, we're back, look at us now,'" Belmont said.

With 2,300 U.S. locations and 650 international units, Quiznos has shrunk considerably since its peak in 2006, when the chain had more than 5,100 locations.

Belmont said traffic and average unit volumes have also suffered in recent years.

"Some of it was the economy and some of it was our inability to put together a sustainable media plan," Belmont said.

The company will return to "pre-2008 levels" in its media spending, he said.

The chain is also looking to spark growth with a new "next generation" prototype that opened recently in Portland, Ore.

The new unit includes subtle d�cor upgrades, such as warmer colors, wood finishes and a darker millwork set.

"It's an upscale design with a great value," Belmont said.

The company has also reduced buildout costs to under $175,000, which he said were $25,000 to $50,000 lower than units cost to build in 2010, with the same 1,200- to 1,600-square-foot area.

This year, Quiznos will continue franchisee incentives, including a reduced franchise fee of $5,000 for qualified operators and rebates for well-run restaurants. Royalty requirements of 7 percent remain unchanged.

Still to come is a menu revamp that Belmont could only hint about.

This year, the menu will focus on "featured full-price sandwiches," with premium flavors as limited-time offers. Coming soon, for example, is a lobster and seafood salad and a double cheese cheesesteak.

Sean Fitzgerald, Quiznos' senior vice president of franchise development, said the chain also has new tools for better evaluating the best locations.

The chain is targeting growth in Southern California, Texas, Miami, Atlanta, Chicago and along the New York-Boston-Philadelphia corridor.

"We're going to be more selective about our locations, but also about the type of franchisees we'll be working with," Fitzgerald said, noting that Quiznos will look to partner with more multi-unit operators. "We're marrying the right spots with the right operators."

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