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Quiznos is remaking its recipe for success

Online ordering and other ideas are on tap for the sandwich chain.

January 22, 2008|Sandy Shore | The Associated Press

Is it a sandwich or a taco? A snack or a meal?

The Sammie, the newest product from Quiznos, can fit just about any category. The 200- to 300-calorie concoction of meats and greens folded into flatbread sells for $2.

It's a key ingredient in Greg Brenneman's recipe to reshape the 5,200-restaurant sandwich chain, along with delivery, online ordering, new venues like airport kiosks, colleges and probably a big-box retailer.

Brenneman's agenda is ambitious, designed to better position Quiznos in the fast-food industry, where restaurants aim to please consumers who want convenient food while keeping one eye on the pocketbook and another on the sagging economy.

The Sammie is one of the more innovative products in the value-priced snack or sandwich category, said Darren Tristano, executive vice president of Technomic Inc., a restaurant consulting company.

McDonald's Corp. offers a wrap, KFC has a snacker sandwich and Subway has specials featuring a 6-inch sub for $2.49. "Everybody in some way is addressing it," he said.

Brenneman's other ideas are intriguing -- particularly delivery service and online ordering -- Tristano said. "Very few chains are doing online ordering," he said. "The next generation really wants that."

The Denver-based, privately held chain is the latest turnaround project for Brenneman, a hard-driving executive with a "get-it-done" mantra.

Brenneman has borrowed from two previous turnaround projects -- Continental Airlines Inc. and Burger King -- for his revitalization of Quiznos, which he joined last January as chief executive. Quiznos was plagued by franchisee complaints about high food costs, low profit and company restrictions on how they could do business.

Brenneman and his team found the chain had a strong brand but weak profit created by a number of corporate decisions over the years. The complex menu listed 29 sandwiches, including specialty sandwiches each available in three sizes and at three prices. Quiznos used coupons to attract patrons.

Brenneman assembled a team of fast-food industry veterans and began a "detoxing" process. They retooled the menu, eliminating about 15% of the items and reducing the use of coupon offers to draw traffic.

"This year, as we detoxed everything, we expected sales to come down fairly dramatically. They didn't actually," Brenneman said.

With the changes, food costs for franchisees fell about 4% across the board but transactions per store slowed before beginning to pick up in the fourth quarter, said Steve Provost, chief marketing officer.

"We had that stretch of time where we had to sort of say we've got to do this stuff because we've got to fix your profitability," he said.

Average sales for last year are estimated at $415,000 per store, about the same as 2006, Quiznos said. As a privately held company, it does not release most financial data.

Franchisees have reported mixed results from the changes; some are elated but others still see problems.

Danny Kessels, who runs a Quiznos store in Boulder, Colo., said food costs are high and some franchisees have concerns over placement of stores. He said his profit last year was down 3% to 5%. Kessels is president of the Toasted Sub Franchisee Assn., a support group that he said represents more than 205 owners.

In Shawnee, Okla., franchisee Gary Smoot said his profit increased about 8% from June to December, compared with the same six-month period in 2006. "The operators in this area are by and large much happier with what's going on," he said.

This month, Quiznos is unveiling a new ad campaign featuring the baritone voice of actor Michael Clarke Duncan and a new slogan, "Mmmm, Quiznos, love what you eat."

Other new products in the offing include a lobster salad sandwich and even a pizza.

Brenneman has high expectations for the delivery program aimed at consumers who stay at work for lunch. Franchisee owners can add delivery for a $6,250 fee and can decide how and when to offer the service.

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