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Update to “What a Quiznos Franchisee Makes”

spreadsheet logo Download the Quiznos Profit Spreadsheet

Based on the 115 comments, the most popular post on FranchisePundit.com has been What a Quizos Franchisee Makes, posted on April 10, 2005. The purported author of the financial projects also founded the web site QuiznosSucks.com (don’t bother going there, it now defunt and replaced with a domain aggregator’s advertising search engine). More of his experience is posted in this forum thread (pdf) on ToastedSubs.info. Here is the main snippet:

QuiznosSucks
08-10-2005, 11:35 AM
Yeah, Corporate is aware of Quiznossucks.com. Richard Sauls, the fellow who is responsible for the site, is himself a former Quiznos franchisee. Corporate actually sued to force him to kill the site and lost. My own feeling is that Quiznossucks makes them a bit nervous. It was developed on a shoestring and to little fanfare, but now averages in the neighborhood of 30k hits per day. I know that ever franchisor has its share of unhappy franchisees, but the situation with Quizno’s has reached a fever-pitch. From my research, the only
comparable situation I have found is UPS Store franchisees.

Ultimately, the Quizno’s business model doesn’t work. particulars vary from region to region, and depend heavily upon the franchisee’s rent and debt load, but break-even for a Quizno’s store is astronomical for this type of operation. The only thing keeping this house of cards aloft are second and third owners, who buy existing stores based on cash flow, at a fraction of the cost of a new store. I actually had a Q owner in my area approach me to see if i was interested in buying his store. The store was 3 years old, and he was running at break-even for the first year-and-a-half, with sales around 6700 per week. The Q opened a store near him (you have no radius protection with Q. technically speaking, if they wanted to open another store across the street from you, and could find someone fool enough to do it, they’re within their rights), and his sales dropped off 5%, which put him in the red to the tune of about $1100 per week. he offered the store to me at 80k, and i wasn’t interested. I am one of the “lucky” ones, in that I’ve very little debt, and an excellent location. For the time being, my store is making money. Unfortuantely, though, there is a lot of new development around me, and I am waiting for the day when Q decides that I am doing too well and opens stores closer to me. My store is for sale, along with his, and I am hoping i can sell the thing while it is still making money. The short of it is that Q is in the business of selling franchises, and they do this extremely well. Too well, if you ask any current franchisee. In the grand scheme of things, they would prefer that we make money than not, but it doesn’t much matter to them. Corporate makes more money from its supply chain. We’re forced to use their Q-approved vendors, each at a rate consdierably higher than we could find ourselves: accounting firm; CINTAS, a company which takes care of the rugs and towels; Vistar for food, chemicals and paper; Muzak…it goes on and on. The real shame of it is that Q doesn’t have to do business this way. It is ultimately self-defeating, in that no franchisor can alienate its franchisees to the degree Q has alienated us without serious repercussions. Quiznossucks.com is a natural by-product of the contempt with which Q treats its franchisees. If anyone is still interested in acquiring a Quizno’s store after all of my ramblings, and visiting quiznossucks.com, i would suggest that you go to bizbuysell.com, find an existing store in your area and save someone who is losing money, or someone like me, who has a store that is making money…for now. really! I am too young and nice looking for the headaches and stress!

This web site posted his projected monthly expenses based on $40,000/month in sales:

If a store earns $40,000 / month:
7% Royalty $ 2,800
1% Local Advertising $ 400
3% national advertising $ 1,200
20% Labor $ 8,000
29% Food $ 11,600
3% Paper $ 1,200
.3% Accounting/Payroll $ 300
10% Rent/CAM $ 4,000
2.75% Insurance / Misc. $ 1,100
5% repay SBA loan $ 2,000
4.5% misc bills (utilities, etc) $ 1,800
.5% Spoilage $ 200
1% Supplies $ 400
1% Promo Food $ 400
1% Comp Food $ 400
2.9% Credit Card Fee $ 1,160
.4% Coupons $ 160
.5% Food Waste $ 200

I think quiznossucks may have made a mistake in his numbers and the cash left over at the end of the month is actually a little less than he projected. He projected 9.4% or $45,120 left at the end of the year for the franchisee, but plugging the numbers into a spreadsheet nets 7.15% or $34,320 (perhaps he paid himself a small salary included in labor). Regardless of the $9K discrepency, the debt load and returns are not worth the risk for nearly anyone looking at this deal. I’ve uploaded a spreadsheet for you to play with the numbers for yourself. It makes for a simple planning tool/reality check for any franchise.

spreadsheet logo Download the Quiznos Profit Spreadsheet

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.
6 comments
Guest
Guest

Sounds great! Go for it!!

deep
deep

i thinking about buying a quiznos. $2,000 daily sales. $6000 franchise fee + inventory $150,000 GOODWILL to the current owner. Is this a good buy.

Church Events
Church Events

Wow, so apparently Quiznos paid the former owner of QuiznosSucks.com a handsome amount of money, because it links to the regular Quiznos site now. THAT sucks! I was in Quiznos yesterday, and I wondered how people actually make money with these stores, especially when they run the specials. I like Quiznos a lot...but I will almost always NOT go unless they have a special deal, like buy the sandwich, get free chips & a drink, or the recent $2.99 meal deal. I feel bad for the franchisees who have lost money due to a greedy corporate leadership. I wish the QF Alliance luck in banding together!

QF Alliance
QF Alliance

We are a small group of franchisees trying to unite other franchisees in sharing ideas on how to survive... cutting costs, increasing sales, and sharing other business practices. If we can get a large following, we can not only help each other, but we can perhaps use our united voice to influence change. The key is to get us all together somewhere. We're recommending www.qfalliance.com. 3 Quiznos Franchisees

guest
guest

An update about Quiznos - Food costs have gone up now 32% Now Syrups and soft drinks have gone up 6% Pork products have gone up 5% ADD ALL OF THIS TO THE- minimum wage increase and the 2% a year rent increase, and co2 and you have a losing franchise model. Now after Brennemen and Deno promised less coupons, headquarters has quadrupled them !Even on line and all the people are looking for a deal, so wham goes what is left of the profit. The best of Quiznos make a net of 5% a year on $400,000- in sales !! Heck, thats not even minimum wage - This great investment will make a return on investment in a 152 years of ownership. Its getting worse - They are giving an additioal sandwich for $1.00 if you buy one at regular price- thats 64% food costs, which means we lose money on every sandwich and they say it is to bring in new customers Ha Ha - all it brings is the deal shoppers and we lose money ---------------------What a tough road and no way to get out !!

Q Zee
Q Zee

Thanks for posting the spreadsheet Ryan. I wouldn't go so far as quiznossucks guy to say that the business model doesn't work, but that the FOOD costs are too high. Trim the royalty buy 2% and food costs from 30% to 25% saves $1,600/month. Trim the royalty from 7% to 6% given all kickbacks to Quiznos corporate on the backend and save another $400. Those two drops will give the franchisee an extra $2,000/month which should make this a more attractive business model at existing sales levels.