It wasn't long ago that Quiznos was a pretty big deal.
But it turns out those tasty toasted rolls weren't enough to keep them on the top of
the food chain when it comes to fast food sub shops.
They've closed more than 90 percent of their stores in the last decade, and here's why.
No chain survives without the support of their franchisees, but Quiznos corporate has made
it incredibly difficult for stores to turn a profit problems that start with their supply
chain.
Most fast food franchises negotiate with vendors who then supply locations directly and at
a reduced cost, since they're buying in bulk.
But Quiznos corporate buys all supplies from vendors, then turns around and sells them
to franchisees.
While most restaurants ideally operate with a food cost of 30 percent, Quiznos forces
their franchisees to start with a cost of up to 39 percent.
That means a Quiznos location needs to sell a lot more than a comparable Subway before
they even break even.
That backwards business plan has ended up breaking the franchise owners they should
have been helping, and it's cost them.
In 2006, around 10,000 franchise owners took corporate to court with a class action lawsuit.
According to Forbes, they claimed corporate was essentially making them what's termed
"captive customers" and forced them to buy supplies at grossly inflated prices that made
it nearly impossible for them to be successful.
Quiznos argued they were simply passing market costs on down the line, but they were forced
to settle the lawsuit and pay out a whopping $206 million to their franchisees.
And that was just the start.
Other franchisees sued separately, and at the same time Quiznos is fighting on that
front, 6,900 franchisees in Colorado, Illinois, and Wisconsin filed a similar suit.
They won $95 million, with a huge chunk of that going to franchisees who paid their fees
but were never allowed to even open a restaurant, because of ongoing location disputes.
The entire point of an advertising campaign is to get people to buy a product, not make
them undeniably uncomfortable.
Quiznos missed that day in advertising school, and Business Insider called the creepy spongmonkeys
from Quiznos one of The 10 Worst Ad Campaigns Of All Time.
"The Quiznos subs.
We’d eat them raw but eating raw subs is barbaric."
Customers agreed.
The spongmonkeys were all over Quiznos advertising from February 2004 until August of the same
year, and if it feels like you were tortured by them for a lot longer than that, well,
that just shows how much damage they did.
They were so maligned that some stores took to posting signage apologizing for them, and
in the first week, Quiznos' Denver headquarters got around 30,000 phone calls from people
wondering what the heck was going on.
"I thought we were all good people here."
That's not the only time Quiznos missed big time with a marketing campaign, and ended
up pushing customers away.
In 2009, their uncomfortable attempt at making a sexually aggressive toaster oven hilarious
once again fell short, and did more harm than good.
"Scott…I want you to do something.”
“Not doing that again.
I got burned.”
"We both enjoyed that"
In 2009, Quiznos tried to get some serious goodwill with coupons for free sandwiches,
but it wasn't long before customers were getting denied their subs.
Some locations didn't honor the coupons at all, others only accepted them if customers
bought something else, and needless to say, people were not happy.
Consumerist found that franchisees had a very good reason for not accepting the coupons:
they weren't being compensated by corporate, and instead were expected to eat the cost
of the "free" subs.
A few days after the promotion started, an internal memo suggested corporate was going
to start helping with the costs of the promotion, and at the time, they said they'd already
had nearly 200,000 coupons printed.
That's a ton of subs that could cripple already struggling franchises, and while Quiznos promised
to make it right, that's not the kind of slap in the face that people forget.
The very heart of Quiznos' problems has been the relationship between corporate offices
and their franchisees.
The two sides formed into very distinct groups that drove lawsuits forward thanks to the
work of franchise owner Bhupinder Baber, whose tragic story led to chain-wide recognition
of owners' problems.
Baber owned two locations in Long Beach, California, and when Quiznos allowed another franchisee
to open nearby, his sales plummeted.
Getting no response from the corporate offices who had promised him no one would be opening
nearby, he organized other struggling franchisees into the Quiznos Franchisee Association.
That was in 2004, and according to the Long Beach Post, that was when Quiznos ended Baber's
franchisee agreement.
By 2005, Baber was slated to go to the Denver headquarters to argue his claims.
Fearing the trip was going to cost him too much and he would lose what little he had , he walked into a Quiznos bathroom and killed himself.
He left behind a note calling for an investigation into Quiznos and their business practices,
and that note was released to the public.
The Post says the nightmarish tangle of lawsuits Quiznos and their franchisees were embroiled
in for years has roots in Baber's franchisee organization, and that's the sort of thing
no one can ignore.
If you or anyone you know is having suicidal thoughts, please call the National Suicide
Prevention Lifeline at 1-800-273-TALK (8255).