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Quiznos Bankruptcy A Victim Of The US Recession, Company Owes $500 Million

Quiznos Closed

The Quiznos bankruptcy is another sign of the times, pointing out how the US recession has been squeezing small businesses during these hard times.

In a related report by The Inquisitr, small businesses like Papa Johns and Quiznos were afraid of the impact Obamacaer may have on their ability to stay afloat. Before the launch of the Affordable Care Act it was estimated the cost to local business owners would be up to $30,000 per year. At the time, Quiznos owner Randall Tabor said, “I don’t have the profit margin to pay for it.”

Over the last several years there has been a developing trend in the small business world. Eateries and restaurants that focus on being affordable or cheap are doing well. High end restaurants are also doing very well because the rich have seen their money bounce back after the calamitous downfall in 2008. But it’s businesses like Quiznos which have been caught in the middle and are facing bankruptcy.

According to Bob Goldin, executive vice president at Chicago-based restaurant researcher Technomic Inc., in relation to Quiznos Panera Bread represented the high end and Subway the low:

“They expanded too fast, they had a weak franchisee network. Once the Paneras of the world came along, I think, many consumers thought that was a better quality price point. And Subway came in on the lower end and aggressively promoted themselves as fresh.”

From the beginning, Quiznos targeted higher end consumers with arguably meatier, hotter sandwiches in comparison to Subway. So when many of the locations were set up they purposefully went for areas that were more middle class. But as the US recession hit deeper many just cared about the $5 sub and not whether Quiznos was a better product or not. Quiznos responded by lowering their prices, but since they kept their premium ingredients the profitability was squeezed to the point of bankruptcy.

The good news is that the Quiznos bankruptcy will not affect the independently owned and operated franchises, which is said to be the vast majority of locations. The corporation will also attempt to restructure in order to keep operating, but they’ve also closed about 2,500 locations over the last five years.

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