QIP Holder LLC is a franchised fast-food restaurant brand based in Denver,
Colorado, which specializes in offering toasted submarine sandwiches. The
restaurant chain was founded in 1981 by Jimmy Lambatos and sold to Rick and
Richard Schaden in 1991, and grew to nearly 5,000 restaurants. As of the end
of 2013, the chain had about 1,500 domestic locations and about 600
international locations. Quiznos is the second-largest submarine sandwich shop
chain in North America, after Subway. History
= Early history= The first Quiznos restaurant was opened
in Denver, Colorado, by founder Jimmy Lambatos. At the time, Lambatos was an
experienced chef, having previously worked as an executive chef for the
Colorado Mine Co. Steakhouse, and having founded the Italian restaurant Footers
in 1978. He founded Quiznos with partner Todd Disner in the spring of 1981. The
first location was at the corner of 13th and Grant Streets in the Capitol Hill
neighborhood of the city. According to Kevin Jenkins, "It was there that
recipes for Quiznos special baguette-style bread, special dressings
and unique recipes were created." According to Patrick Sweeney, "The
sandwich shop earned a following for its toasted subs that Lambatos said were
inspired by the oven-baked sandwiches he enjoyed while growing up in New York."
Lambatos said of his decision to toast the submarine sandwiches at the first
Quiznos that, "it's a signature type of thing. Heating anything brings out the
flavors in food products." The restaurant menu featured toasted
submarine sandwiches, as well as salads, soups, and desserts.
= Expansion= After two years, the restaurant started
offering franchises to facilitate expansion offering its first franchises
in 1983. The franchises were offered under the name Quiznos American, Inc. By
1987, 12 Quiznos restaurant locations were operating in the United States.
That year, Rick Schaden, at the age of 23, and his father, aviation attorney
Richard Schaden, opened their first Quiznos franchise in a Boulder,
Colorado, shopping center. They opened three additional restaurants before
purchasing the 18-restaurant chain from the founders in January 1991 and renamed
it the Quiznos Franchise Corp. Rick Schaden became the president, and then
CEO, of Quiznos after the purchase. Jenkins wrote that Schaden, "began
building a professional infrastructure to support franchise owners that
included volume purchasing, standardized training, and operations procedures, as
well as marketing support." Quiznos was taken public in February 1994, with an
IPO of one million shares of stock at $5 per share, resulting in a $4.4 million
yield. By the end of 1995, Quiznos had 103 different locations.
In 1997, Quiznos became the number-three submarine sandwich franchise in the
world, with 278 locations in the U.S. and Puerto Rico. The following year,
Quiznos Canada acquired the master franchise rights to Quiznos restaurants
in Canada, as well as the master rights in the United Kingdom in 1999. Glenvista
Enterprises then acquired the rights for several states in Australia. KMN USA LLC
acquired the franchise rights for Japan, opening its first location in early
1999. The company again went private in June 2001. In 2002, Wendy's acquired the
rights to the brand for franchises in Australia, and later, New Zealand, but
was unsuccessful in launching the chain in either country. The first location in
Mexico opened in Monterrey in 2002. In 2005, the company partnered with Ray
Wilson to open a new chain of fitness clubs called 123 Fit. At its peak in
2007, there were more than 5,000 Quiznos franchise locations.
The first location in Canada opened in Vancouver in 1996. The first European
location opened in 2001 in Peterborough in the United Kingdom. The first
location in India opened in Hyderabad in 2011, followed by the first location in
the Philippines opened in 2012. In 2013, Quiznos opened its first two locations
in Russia during the same weekend in St. Petersburg. Quiznos opened its first
Taiwan location in Taipei and also its first United Arab Emirates location in
Abu Dhabi in September 2014. = Recession and restructuring=
Between 2007 and 2009, 1,000 Quiznos stores closed. After the closure of
around 2,000 restaurants during the Great Recession, a majority stake in the
company was purchased by Avenue Capital Group of New York in January 2012.
According to Ed Sealover, the purchase was done in "a deal that eliminated
about one-third of the company’s $900 million debt and infused about $150
million cash into the company." Avenue Capital Group brought on turnaround
specialist Harsha V. Agadi as Quiznos executive chairman. They also brought on
Stuart Mathis as CEO; the former president of The UPS Store stated that
the company would try to counteract shrinking sales by promoting "the
quality of its food." = Bankruptcy=
On March 14, 2014, Quiznos filed for Chapter 11 bankruptcy in the United
States Bankruptcy Court for the District of Colorado. Quiznos said it would
continue operating while it restructured its debt and made operational
improvements. Quiznos emerged from bankruptcy about four months later on
June 30, 2014, and reduced its debt by about $400 million.
Locations There are over 2,100 Quiznos shops
located mostly in the United States and Canada. The chain also said it planned
to expand to locations in over 40 countries and territories, including
Europe, the Middle East, Southeast Asia and Central and South America, by 2012.
In July 2013, the company stated it planned to expand into Russia, where it
is looking to open about 500 stores. QSR wrote in November 2013 that, "Following
its most recent international successes in Mexico, Russia, and the United Arab
Emirates, Quiznos will bring toasted sandwiches to Indonesia with the
signature of PT Quiznosindo as the brand’s newest franchisor. The group,
led by Tan Po Lian, plans to open 100 units in Indonesia over the next 10
years ... Quiznos South Korea has seen a system wide 12 percent sales lift,
largely due to a country-wide marketing campaign, featuring actor Lee Sang Yoon,
launched in March 2013. ... Expansion into Pakistan, Singapore, South Korea,
the Philippines, and Indonesia is part of Quiznos’ continued international
development plan to open more than 1,000 international stores in more than 40
countries by 2020." Advertising
The company's first major advertising push was a successful advertising
campaign during the 2002 Super Bowl. Early TV spots advertised the innovation
of toasting sandwiches, as compared to the inventor of pants. One commercial in
2003 depicted a man who had been "raised by wolves" by suckling at a mother
wolf's teat. Other promotions include an early 2004 campaign featuring bizarre,
rodent-like, singing creatures called Spongmonkeys, as well as a series of
Quiznos commercials in Canada featuring hockey commentator Don Cherry. In 2005,
Quiznos launched a campaign featuring Baby Bob.
In June 2006, Quiznos revealed its new slogan: "Eat Up." Ads nationwide feature
a Quiznos sub with steam emanating from it with the tagline, "Mmmm... toasty."
Actor Michael Clarke Duncan formerly provided the voiceover for all Quiznos
commercials. On September 18, 2006, Quiznos launched the most aggressive
advertising campaign aimed at Subway. Dubbed the "Prime Rib Cheesesteak
Challenge," customers were asked to compare the brand new Prime Rib
Cheesesteak against Subway's Cheesesteak sandwich. The claim is that the Prime
Rib Cheesesteak has twice the meat of Subway's Cheesesteak. If the customers
are not satisfied, then they can fill out a form, mail the form along with
their receipt, and they will receive a coupon for a free sandwich. In
subsequent advertisements, Quiznos was shown competing with the fictional
"Wrong Way" restaurant based on competing restaurants.
The Coca-Cola Company was originally the primary soft drink supplier for the
franchise, until 2005. At that time, Coca-Cola signed an exclusive agreement
to provide soft drinks to the competing Subway franchise. As a result, Quiznos
signed an exclusive deal with PepsiCo and Dr Pepper Snapple Group.
Lawsuits and controversies One lawsuit cited a memorandum drafted
by a Quiznos lawyer in 2003 that stated, “40 percent of Quiznos units are not
breaking even,” a fact that prospective franchisees say they were never told.
The Small Business Administration said 23.4 percent of Quiznos franchises with
SBA loans failed. In contrast, Subway had a 4.8 percent failure rate.
As a single example of an unprofitable franchise, Fredrick N. Westerfield was
running three Quiznos in Wisconsin. After spending $14,000 in personal
savings to keep the stores running, he realized he had a debt of $750,000. He
closed all his stores in 2005. "Customers used to come into the store
and say to me, 'You must be rolling in the money,'" recalled Mr. Westerfield.
"If they only knew." In 2002, the Seattle Times reported that
the company initially ignored the plight of a Quiznos employee who took over
operations of one Quiznos store after the true owner abandoned it. Months
later, the store was closed. In June 2004, the Quiznos at Downtown Crossing,
Boston, was at the center of a hepatitis scare. Quiznos has been the target of
several lawsuits related to its treatment of franchisees, including
lawsuits in New Jersey and Wisconsin. It has faced more lawsuits from franchisees
than bigger chains, such as McDonald’s, Burger King, Wendy’s, and even its
sandwich competitors Subway and Blimpie, according to an analysis by the legal
research firm Thomson West. In February 2007, Quiznos franchisees filed a
lawsuit seeking class-action status in Michigan.
One lawsuit filed in New Jersey that sought class-action status, said that
the astounding growth record of Quiznos is merely a facade. In 2003 and 2004,
Quiznos said it sold 234 “trade areas” in the state of New Jersey to
franchisees, collecting the $25,000 franchisee fee, but none of these
locations ever opened, according to the lawsuit. Three years after handing over
her check for the fee, Elisa Whitehall said that she had yet to open a Quiznos
in the location she bought and that Quiznos refused to return the fee.
In 2006, Quiznos sent letters to 300 franchises saying mystery shoppers would
be coming to test their services. The company sued franchise owners Richard
Piotrowski and Ellen Blickman for not putting enough meat in a prime rib
sandwich. Piotrowski and Blickman countersued and won the lawsuit in 2009.
Judge Morris Hoffman called the meat-weighing exercise and subsequent
termination letters a “charade” aimed at bolstering a national ad campaign
against rival Subway. As of July 1, 2010, Quiznos was close to
reaching a settlement over the multiyear class-action lawsuit that covers nearly
10,000 of its current and former franchisees. The case comprises four
separate class-action lawsuits dating back to 2006 which consolidated in 2009
— involved allegations by attorneys for franchisees that Quiznos Franchise Co.
LLC and other entities with ownership or control of the Quiznos chain had
violated U.S. racketeering and corruption statutes. Also at issue was
the chain’s supply chain and food costs, marketing and advertising funds, and
disputes among franchisees that agreed to, but did not open, locations and
whether royalties are owed. Quiznos has denied all claims made in the lawsuits
and the settlement agreement involves no finding or admission of liability. The
cost to Quiznos has been estimated from $100 to $200 million.
On November 27, 2006, Bhupinder Baber, franchise owner of two Long Beach,
California, Quiznos locations, committed suicide after a legal battle with the
company. In his suicide note, Baber attributed mistreatment by Quiznos to
driving him to suicide. The Toasted Subs Franchisee Association, a group of
franchisees, posted Baber's suicide note on its website, and intended to raise
money for Baber's family. Quiznos attempted to terminate the TSFA's
franchises. The TSFA in turn filed an injunction on December 15, 2006, in the
District Court of Colorado. A 2014 article in the Long Beach Post suggested
that the factors that contributed to Baber's suicide also lead to the parent
company's bankruptcy in 2014. Mascots
In 2004, Quiznos started using the bizarre, fuzzy looking creatures called
the Spongmonkeys in their advertising commercials. One of them plays a guitar,
and the other sings a song called "We Love the Subs", in an apparent and
shorter spoof of their original song, "We Like the Moon". Several commercials
with the Spongmonkeys were released, including ones about rejoice and
coupons. However, after a few months, Quiznos discontinued airing these
commercials. An inflatable character costume that is
in the style of a plastic Quiznos cup and is used in and around the store.
See also List of submarine sandwich restaurants
References External links
Official website