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A Quiznos franchisee posts his financial results. With $480,000 in gross revenue, the franchisee nets $45,000 before taxes. Is that a good investment?

What a Quiznos franchisee makes

As a follow up to our previous article regarding Quiznos and the importance of legal representation, the QuiznosSucks.com owner posted his (claimed) financial results from owning a Quiznos franchise:

Topic: How much a Quiznos earns
Posted by: XXXXXXX
Date/Time: in 2005

I am a Quiznos franchisee. Here is a breakdown of how much a franchisee can potentially earn — or not earn.

The figures are not necessarily BAD, I guess I just wish someone gave me these hard figured BEFORE I bought one.

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

No one has any control over %. They are fixed and that is that. So if a store is lucky enough to earn $480,000 annual, the owner can expect to walk away with a profit of 9.4% = $45,120 [edit by Ryan Knoll: I believe this should be 7.15% = $34,320 based on the numbers provided]. No one is going get rich off of that. Of course if an owner can get cheaper rent, and increase sales, it will be of great benefit.

The average store seems to be about 1,500 – 1800 sq ft. and the going rate is $17.50 – $30.00 sq ft + $5.50 – $8.00 CAM.

That looks reasonable to me and should be considered by anyone buying an existing or new franchise. People often forget the expense of promos and coupons, credit card fees, insurance, and payroll expenses. The pretty picture the franchise sales rep paints for you often is the “best case” scenario.

Well, you might think, “That’s a 18% return on my investment of $250,000! I’ll take it!”. That’s not an accurate reflection of your actual return. Those results assume you are working at the franchise full-time and do not include your or your manager’s salary. So, if you think your year’s effort is fairly compensated at $45,000, then your real return on your investment is ZERO (actually it’s negative because you could be making 4-5% in bonds).

About Ryan Knoll

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

Thanks in support of sharing such a pleasant thought, post is fastidious, thats why i have read it entirely

Ken
Ken

I do not own a Quiznos not any franchise but the credit card 2.9% seems wrong. I would think 50% of sales of cash so that would reduce that expense some. I have spoken to a number of the Quiznos owners/managers around here before they all closed and they all indicated it was impossible to make money given the markups/kickbacks the parent corporation was getting on supplies. I don't know if reputable chains like McDonalds price supplies better or if they allow owners to contract their own suppliers as long as they meet corporate standards but it seems to be Quiznos could be successful if corporate made it a priority to support the success of the franchises. I have had some of the best sandwiches ever at Quiznos so I know it could succeed if they solved the money issues.

Philco44
Philco44

When a Quiznos franchisee sell his business, is it required that the franchise must be a part of it, or can they only do an asset sale. I may be interested in buying a store in central florida but I don't want the franchise.

Mike
Mike

I've worked for a Quiznos franchise for the last 6 months. Having come from a McDonald's background, I am more or less aware of the components that make up a successful franchising system. Quiznos is the polar opposite on nearly every count. Quiznos charges 7% for royalties. This is 2x the amount that McDonald's charges, which seems somewhat exorbitant when you consider the annual sales for the average McDonald's restaurant are roughly 6x higher than the annual sales of a Quiznos (based on $2M annual for McDonald's and $300K for Quiznos). The TARGET food cost for a Quiznos restaurant is somewhere around 30%, and it can vary by several percentage points depending on the fluctuating weekly invoice prices. McDonald's base food cost (in the region that I worked in) was around 22.5% with the target P&L food cost being 3% over base, or 25.5%. McDonald's also had some seasonal variations in food cost caused by fluctuating prices, but these were rarely severe, and never as frequent as those affecting Quiznos. The food cost problem can be explained very simply; the Quiznos corporation makes a profit from the food that it sells to its franchisees, McDonald's corporate does not. Quiznos owns the company that produces the food franchisees are required to purchase, and that company makes a healthy profit on every item that it sells. This is in addition to the insanely high royalties that are being charged. All rebates received from national manufacturers are kept by Quiznos, which results in franchisees paying more for some products (bottled sodas, chips, etc.) purchased directly from manufacturers than they would pay in a retail store such as Sam's Club. This price discrepancy is also apparent in the meat, cheese, and produce supplied to the franchisees by Quiznos. In many cases, it is cheaper for the franchisee to buy supplies from a local retailer than it is to order from Quiznos. The result is inconsistent producty quality from store to store, which leads to dissatisfied customers. For McDonald's, there is a separate distribution system in place, and all rebates received from suppliers are given directly to the franchisees as a way to help them control costs and prevent them from trying to circumvent the distribution system. McDonald's products are very consistent from location to location, becauase it is considerably more expensive to buy those products from any other supplier. There are numerous other examples of less-than-reputable practices on the part of Quiznos, but it has been some time since I reviewed the actual data concerning some of McDonald's policies (coupon reimbursement, equipment costs, remodellling expenses, mandatory POS upgrades, etc.), and I do not wish to provide inaccurate or misleading information. Please note that the percentages described pertain only to the two restaurants I actually worked in, and that there will naturally be some variation in statistics from one store to another, or one region to another. The examples provided merely serve to illustrate the point that the Quiznos franchise system is inherently abusive and conterintuitive. McDonald's works with the franchisees to help make them successful, then reaps the financial rewards when the franchisees develop outstanding stores that routinely deliver profitable sales. Quiznos works against the franchisees to cripple them and squeeze them for every dime they possibly can. This is the reason that McDonald's is wildly successful and Quiznos is on the verge of collapse. The saddest part of all of this is that Quiznos has an outstanding product, and wonderfully dedicated people working hard as owners, managers, and employees trying to provide quality food and service to the people in their communities on a daily basis. If Quiznos provided them with a workable business model, the franchisees would flourish, and the Quiznos corporation would be able to reap the financial benefits that accompany healthy sales. That they woudl choose to abuse the very people trying so hard to make the business succeed is regrettable.

So helpful
So helpful

I am focused on opening my own business, buying a franchise. Thanks so much for sharing with potential investors like me. Finally, what is the best business, or franchise someone could invest in actually?

joe joe
joe joe

WARNING - BAD FRANCHISE - NOT MAKING MONEY - CLOSING STORES. CORPORATE EXECUTIVES RUNNING THIS COMPANY SHOULD BE INVESTIGATED. JUST HORRIBLE

daniel
daniel

Quiznos for sale in Miami...owner moving to Atlanta ...good sales great location any interested send email to dannynwa@hotmail.com...good price negociable

Sylvia Garsjo
Sylvia Garsjo

Hi there! Quick question that's totally off topic. Do you know how to make your site mobile friendly? My blog looks weird when viewing from my iphone. I'm trying to find a template or plugin that might be able to correct this problem. If you have any recommendations, please share. With thanks!

Too Little Too Late
Too Little Too Late

I opened my Q"s in 2005 and havent made a single cent, in fact it has been bleeding me dry. After all the compliants they decide to kick back 4%, too little too late. if they would have done this when the economy wasnt in the tank we probably could have made some money. My biggest joy is that I convinced at least a dozen people from not opening up a Q's.

Percentages not correct
Percentages not correct

From everything I've heard from owners the cost of food runs closer to 35%. Not 29% as stated.

Def. Quiznos SCREWED
Def. Quiznos SCREWED

Quiznos is a Crock, Non of the figures are correct. You will be lucky if you make a Dollar. We Purchased a store in April of 2009, our Loss for 2009 was greater than $34000.00, Yes That's loss not profit, we pulled that from our own individual pockets. I expect our loss in 2010 to be greater than -$50,000.00. If you want something good go else where. We have contemplated closure but for us its not the right time. YOU WILL NOT MAKE A DIME. We run the company and have not gotten a pay check since 2 months after we bought IT!

got Qued
got Qued

As a quiznos owner, This break down is incorrect. The coupon/discount will be at least 9% 3600.00 a month not 0.4% $160.00. You get that in one day! Even if you decide not to take coupons(loose customers) there's the combo and the "choose 2 for $5" Discounts. My store averages around 11%. Nor have I or the other owners I know able get food cost under 32%. I could go on for hours. I will be closing my store thanksgiving for good!

T bone
T bone

DONT DO IT!!! U WILL NEVER MAKE MONEY!!!! ITS THAT SIMPLE

Breakdown Not Accurate
Breakdown Not Accurate

There are a few items not correct. No way you can staff your restaurant adequately with a labor percentage at 20% unless you've decided to be at the store managing seven days a week or have family managing/working for free, food prices will be near 40% if you're buying strictly from Q and using their "recommended" pricing. (the food cost of the Buffalo Chicken sandwich is right at 50%) Quiznos coupons like crazy. If you take them all you'll see a discount rate of at least 10%, in several areas of the country there's an extra one percent taken for advertising. Finally there is no real tv advertising to speak of and if you don't know it, tv advertising drives fast food sales. TV. Not coupons, not radio, not local store marketing. Besides, how much LSM can you do when you're already giving Q 12% of your gross? Finally, with minimum wage help if you think you'll get by with that small amount of waste and no theft you're dumb as a box of rocks. You don't have to believe me but as a former Quiznos owner I can say with 100% certainty that if you use these numbers and buy a Q that $34,000 will be a mirage and you'll end up in the poor house with the rest of us.

Toasted Twice
Toasted Twice

I've never could have believed just how corrupt any company could be until I bought into two Quiznos stores. Ive followed this site for four years...., how many times must it be repeated? ......Quiznos is FUCKED! If anyone even considers taking on a franchise after reading this blog, then you deserve your eminent bankruptcy ! SAY NO MORE

AnotherQuiznosBankruptcy
AnotherQuiznosBankruptcy

Run for your life...............I owned 2 Quiznos and have filed Chapter 7. I sold 1 of my 2 to a couple of bankers who had another Quiznos and and those guys filed a 7 also. 3 Q closed in our immediate area within 2 weeks. I lost EVERYTHING. I even got one with all the equipment FREE and STILL LOST MONEY

SamuraiMarine
SamuraiMarine

I was not there for it, but it appears the store here in Bako was closed. Story goes that the owner walked in, told the customers to leave told the employees to go home. Locked Up. There is now a little, hand written, sign in the window that says, quite simply; "Out of Business". I am not sure about all the details, since they came to me "third-hand", so if there are any people here that know about the location on California Ave. here in Bakersfield, I would be interested in hearing them.

JD
JD

Wow, everyone. I was planning to buying one Q. Good thing I did some research and found you guys. Thank you very much.

unhappy
unhappy

YES, YOU WILL LOSE EVEN IF IT IS GIVEN TO YOU, FOOD COSTS ARE INCREDIBLE

unhappy
unhappy

AND RUN FAST!!!!!!!!!!!!

Lookin for a franchise
Lookin for a franchise

wow, thanks everyone for your comments. I was close to buying a quizno's franchise but after reading this, NO WAY!

Anonymous
Anonymous

Owned a Quiznos for 3+ years. Most of the franchisees work extremely hard for pennies and are constantly screwed by Q corporate. I read the franchise agreement...ran an exceptional restaurant...turned out to be basically a pact with a company that wants royalties and to hell with the franchisees. Can't believe I survived dealing with those mf's! For those tormented franchisees, there is life after the big Q screw!

Sucks!
Sucks!

They have $2.99 combo coupons (SUB, CHIPS and DRINKS) on their website and no Quiznos accepts them. WTF, no wonder they all close.

Future franchisee
Future franchisee

Does anyone have any feedback concerning Quiznos franchising in Canada? I know someone who wants to buy a 3 year-old franchise from the original operator, and I'm tring to find some info for him. Thanks!

Someone else
Someone else

I wouldn't trust any of these magazines as I'm sure their ratings sometimes go to the highest bidder. That said I have never known of a Subway that went out of business whereas I have never known a Quiznos that stayed in business or successfully turned a profit. They may exist, but not within 30 miles of me.

Vancouver, B.C.
Vancouver, B.C.

I was looking into getting subway since it has been rated no.1 franchise in the entrepreneur magazine. Any thoughts from others would be appreciated especially the franchisees.

Someone
Someone

I can get a Q for about 16,000 dollars in a good location. Only does about 6K a week(owner is absentee, which is never a good idea, since most employees will rob you blind). Rent is way toooooo high, nearly 4k month. This baby will not cashflow even if I get it free and renegotiate the lease. Did a recon of the store and its typical.....3 employees when 2 shoulda sufficed. Typical young workers who dont give a crap about the customer. One employee was kissie kissie with her girlfriend and giving her free food and sat at a table with her for about 1/2 hour while the place had tons of stuff that needed done. The place was not dirty but the employees need to be directed on what to do....ie clean table, take out trash, refill things, etc. My friend has 9 subways and runs them like a gulag.....you have to in order to control costs and you have to hire and fire until you find the right people. These things dont run themselves. I ran the numbers(BTW, IM a CPA) and if I did everything right each month I'd make about 100 dollars a month, maybe. I've looked at numerous franchise and most are evil. Do it their way or your toast. After reading these posts I have decided not to pursue it any further. Thanks everyone for all the posts. Most helpful.

Anonymous
Anonymous

Nothing more from DETROIT. Maybe he committed suicide. Quiznos franchisees have been driven to suicide before. Hopefully for him he has only been busy in bankruptcy court. Sad that what could be a pleasant experience, as evidenced by the successful Subway and Blimpe franchise systems, is instead run in such an evil manner.

Anonymous
Anonymous

Their new ad is their worst yet. Coupled with the new corporate stores it almost seems like quiznos is thumbing their nose at their franchisees. Almost saying "you dared to sue us so now we're going drive you all to bankruptcy through squandering advertising funds and directly competing with you". Knowing this company they are covered legally. They will have a higher power to answer to someday though.

Tard!
Tard!

wow did you take grade school math? Do employees have to pay rent, utilities, food, loans, etc? Employees can easily make more then owners. They have a positive cash flow the second they start their shift. Owners on the other hand have to sell enough to break even before they even see a penny.

Anonymous
Anonymous

Quiznos is now planning to open 600 corporate owned stores. Sadly these stores may be profitable because Quiznos will not gouge them. Then again corporate rudeness, arrogance and incompetence will likely trickle down and be the downfall of these stores. It will be interesting to see how close they put these corporate stores to their already struggling franchisees.

Laura Yogurteur
Laura Yogurteur

It sounds like most are single unit owners working full time in the business so they only have one manager (themselves).

DETROIT
DETROIT

I OWN A QUIZNOS NOW! I AM FEELING MAJOR PAYNE FROM THE LOSS,LIES,GREED THAT THIS COMPANY HAS PUT ME THROUGH! I HATE QUIZNOS!!!! DONT BUY IN! UNLESS YOU WANT TO COMMIT SUICIDE! QUIZNOS TAKES ALL UR MONEY AND LEAVES YOU IN THE STREET DYING! RUN!RUN!RUN AWAY!!!!!

cj
cj

your problem is that your food cost is too high 32.4%. my food cost is around 24% paper 3%.

dav
dav

JD. The consensus of this site seems to be that even taking over a q that you get fo4 nothing is a losing proposition. If they are asking $125k you should offer 1k. This includes $500 for the oven and $500 for tables and chairs. Even then expect to lose money. I hope you love the subs.

JD
JD

I saw this ad on a local broker's site. It is obviously a Quiznos franchise. The cash flow looks healthy as a percentage of gross. I was interested until I saw this blog. Thougts? Restaurant Franchise Listing #15108 General Location Worcester County Current Status New Terms of Sale Asking Price: $115,000 Down Payment: $ Real Estate Value : $ Financing: Flexible financing available to a qualified buyer. Financials Gross Sales: $329,674 Cash Flow: $75,413 General Information Established: 2004 Business Hours: 7 Days - 10am - 10pm Employees: 3 - 5 Area Square Foot: 1,350 Description Own a nationally recognized brand that's CRAVED by millions at a discount price. Turn key opportunity to own this shop located in the heart of a commercial district. This store is very profitable. Reason for sale: Seller is pursuing other business ventures. This business offers a unique chef-inspired menu of delicious sandwiches, soups and salads that consumers love at an affordable price. Plus, you get the benefit of our multi-million dollar national advertising that's like no other (radio, television, print, online, in-store) to make sure to keep those consumers craving more.

Donna
Donna

I owned a Quiznos for almost four years and worked my butt off! I marketed constantly, knew all my regulars and treated them like family, trained employees extensivly, worked myself 60-80 hours a week and the health department told me I ran a model restaurant. After all my effort, I closed my shop last August and I personally lost over $400k and still owe $80k which I am making monthly payments. I was under a area director who never once came to my shop or helped me in any way after begging for help several times, his name is Dave Cazar. He sent his employee Luz, to do inspections and to read to me out of Quiznos manual which I already read from cover to cover. I had to miss my Dad's 75th birthday party due to an surprise inspection. I could go on forever but what I want to say is DO NOT BUY A QUIZNOS! EVER! EVER!!!!!!!! You may end up broke, unemployed and depressed like me.

dave
dave

I was looking into a quiznos that is about to close in my area. They are always out of soda, various meats etc. and it is currently for sale for 50k. Manager says it could close up any day. Thinking about offering 5k plus the franchise fee. With no note and some leg work advertising I think I could at least break even. Rent is only 2100 a month and store bringing in about 200k annually. Any advise would be helpful. I'm not looking to get rich I really just love the subs and hate to see it close for good. Only one within 30 miles!

Niall
Niall

Buying a single franchise, unless it's a Hard Rock, or a McD's, isn't a good way to get rich. It's a good base, to get you moving towards doing okay, and yes, often making less money, for more hours. It's about owning your own business.

Niall
Niall

I keep reading the same thing, over and over again. No business, especially in food/beverage service, is likely, especially on it's own, to be a gold mine. Lemme break down some facts for you. Food cost percentage, no matter WHO your supplier is, is 100% ABSOLUTELY, NEVER....NEVER...a fixed rate. I personally know a couple Q owners, who keep their food cost below 25% consistantly. Profits/hours worked? Please....please...tell me none of you forgot to do the homework part that says initial restaurant owners, average 60+ hours per week, for the first 2 years? That's life in the industry. Can't take it, or deal with it, find a new line of work. I've seen sites like this blast a ton of franchises before. McD's gets less heat than most, but any franchisee, especially a single location deal, had better expect to be putting in the hours. 23.6k annual Q salary, while a reopen is being paid off, +20% of profits...maybe and extra 5k a year, for a couple years, than 100%....coming in at nearly 50k a year....anyone who thinks that's a bad start, for a single unit sub shop, didn't do their homework.

anonymous
anonymous

David, at $250K year, you are losing money! It takes at least 7 or 8000/week to just break even! The food and labor alone are almost 50% of your profits. Add in rent, loans, utilities, sales tax, marketing, musak, cintas, security system, payroll taxes, credit card fees, etc. and you will have NOTHING left! Trust me on this! We made over $380,000 last year and have not even taken a paycheck since last fall! This is no joke!

David
David

I keep reading all this negative info, But also see that no one said the food is bad. everyone likes the food. I am i South Florida, and I am interested in buying a quizno's. will be operated by me full time. at today's prices ( under 50K for a location ), and reported sales of aprox. 250k a year with rental in the neighborhood of 3K per month, is it possible to earn a descent living ? I can buy up to 2 locations at this price, but than, I will need a GM. I would like an input based on today's market condition , pricing of location, pricing of product, and general market acceptability of the brand. is the brand suffers any consumer rejection ?? something that no one here has mentioned. scenario is pretty simple, like most past and current owners, I am trying to buy my family a job, so if I can invest 50K and work hard and get a 40K a year or better in income, it is not a bad proposition ? Feel free to let me know your thoughts.

now hopeless owner
now hopeless owner

I was strongly thinking of reopening a quizno in my town. Yes it was a closed shop, but it has been closed for 3 years and the writing was on the wall when it opened. The owners were lost from the start and quit both of their full time jobs to make it rich with quiznos. Now after reading all the comments I'm ready to run! Reopening cost are nothing compare to starting from scratch, but with a corp. group like that I may change my mind. Help before I drop any cash! Any suggestions on a great franchise?

Mouse
Mouse

That's funny

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  1. […] on 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 […]

  2. […] First, let’s clear up the business basics.¬† This article about the profitability of a Quiznos franchise is very similar to a coffee shop franchise in regards to the breakdown of numbers¬† – so much so that we don’t have much to add or alter. Take a minute to read the shocking truth […]