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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

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.

Ryan Knoll
Ryan Knoll

As long as you are doing an asset purchase and not taking over the lease or busines, you'll probably be ok. But, Quiznos or the Landord may have a lien or prohibition on the sale of the assets. You can usually buy old Quiznos assets dirt cheap on ebay.

Kingsley
Kingsley

i want to sell my quiznos store to Subway. am i breaking any rule or terms of the franchise agreement?

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?

Ken
Ken

I've started and run several businesses and my advice is to skip the franchises and go the do it yourself approach. Yes, you don't get the system and training but you also don't pay a royalty. Many businesses are actually pretty simple, how hard is it to make a sandwich or clean a house? Choose something you are excited about and get a job working for someone else in that business, learn, learn, learn. Maybe the person you would for will be looking for a partner or to expand or to retire and you can benefit from their experience. Finally, always keep a laser-like focus on the bottom line as well as exceeding your customer's expectations.

Ryan Knoll
Ryan Knoll

Its a function of what you'd enjoy and what's needed in the community.

George
George

One that makes money!

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!

Walk Away
Walk Away

if you reported a lose of 34k in '09 and will report a lose of 50k in '10, why don't you just close your doors and hand the keys back and walk away? How do you pay your living costs if you don't make a penny and have lost close to 85k in the past 2 years? Enlighten me.....

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!

Interloper
Interloper

You are correct. coupning at one of my stores is around 11%. Also, f I keep food cost at 29% I run out of product and customers dont come in the day before my shipment arrives so that sales day is historically low. Food can easily go to 32-35% to keep the shelves stocked properly. The Pepsi contract that you have to have is terrible! I can buy the product cheaper at my local super market at the retail price, than I can with the Q national pepsi account prices that Pepsi CO charges. I got another store for "free" and am losing 2,000 per month. Be carefull. The product is great. BUT the economy is in the toilet. CFO is making effort to change things with better ads, lowering royalties. BUT if you are going to buy a store that makes less than 350K a year-- walk away. With 3,500 rent and 300k sales all I do is provide jobs to the community, and my self an $9 per hour job for working 40 hours in the store.

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.

halbertcrocker
halbertcrocker

I own, I run 28% food and last week I ran 14% labor. And I'm only there 35 hours a week. imagine if I were there 7 days.......

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!

Thankfull for this blog
Thankfull for this blog

Thanks to this blog I was seriously going to partner up and purchase a Quiznos. But I will not be going this route anymore. Thanks bloggers

unhappy
unhappy

AMEN BROTHER, I AM ONE OF THE DOPES OF THE Q

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.

jael
jael

They don't close because they DON'T accept insane coupons they close when they do. You have to pay for the food cost up front and then pay a royalty on the sale of a coupon deal that makes you lose money. I know Americans are very poorly educated but you need to try and understand that if a business sells their products for more than they cost to make, they go out of business. Quiznos owners with a 4th grade understanding of math DO NOT take those type of coupons that the corporate office designed to force them out of business and seize their store for resale. Those owners usually make less than a teacher salary and are fighting to keep from going bankrupt and losing their life savings. If you find an owner brave enough to try and save their business by not taking these ridiculous coupons encourage them, don't be an ignoramous and give them a hard time.

Guest
Guest like.author.displayName 1 Like

I think most readers of this blog understand the concept of profit, even the Americans you apparently think little of. The concept of coupons is to attract new customers who will come in, use the coupon, like the food and become a regular customer. If you do not accept the coupon they will leave, go to Subway, and tell everyone they know not to go to your store. Some franchise owners do not understand this concept. For them I have one request: post this on your door so we will not waste each other's time.

PaulBucklaw
PaulBucklaw

@Guest I would see people irritated because we wouldn't take the coupons that were put online. Their first experience, was crap, you think they'll be back. The Q I worked at had Corporate come in and the only guy who said Hello to them was the dishwasher. No one was willing to take their order. And then they sit there with a stopwatch and time how long it takes to make a sandwich. PRIMO!

unhappy
unhappy

we dont accept them because we cannot afford to GIVE food away, Quiznos corp does NOT reimburse franchise owners ONE DIME from coupons

Anonymous
Anonymous

Not surprised she was lying. She is trying to sell store and lies through her teeth. Rumour is store is going bankrupt.

Anonymous
Anonymous

My local quiznos accepts them. Owner said if they send the coupons to HQ they get reimbursed. She said most owners are just too lazy. Any owners care to comment?

halbertcrocker
halbertcrocker like.author.displayName 1 Like

I own. Although they don't reimburse all the money, it sure pays batter than making a customer mad. Plus if you got it online it will also show online if the store accepts coupons or not. I take them all. A happy customer is a customer that spends more.

jimmy
jimmy

HALBERTCROCKER, you hav eto be a new owner! I onwed for 7 yrs-- I got suckered into buying a second store because the first one I owned was doing good "if you dont open it we will give it to somebody else" I did open it but the city could only handle one. All the second did was allow easy access to my already established customer base. Businees was split in half and I was left with two stores that lost money instead of one that made money. The corporate idea is if not to worry abut the coupons beacause you may loose money on the sale but you will make up for it on the volume?????? What does that even mean??? Make up for a loss on volume? So if I sell a sandwich at a $2 loss and the guy comes back once I break even. But the next time he comes back hes got another coupon-- so I loose another $2.......... And so on. These consumers only come when there is a coupon... Hence there is always a coupon!!!!!! What you need to do to survive in the "Q" world is to establish a customer base on a solid product that is not discounted, not skimpted on and is packaged correctly. Don't listen to the smoke show that Rick Schaden and his flunky (G MacDonald) throw out at the franchisees.. Unit as one group and and take control over the food line.... Thats where the money is. Rebellian worked in the Egypt it can work at "Q"

jael
jael

That is a lie. We unfortunately been Quiznos owners for over 7 years and they have NEVER done that. Also corporate will do things like tell you they will give you free product if you run some money losing coupon then they come up with a silly loophole that they don't even tell your corporate Rep about and deduct some outrageous amount of money out of your bank account on top of the overpriced upfront food cost, loss of money from the coupon and royalties. Quiznos corporation sells franchises and makes money through gouging their franchisees. The average Quinzos has been sold 3-4 times. The corporation office drains all of a person's life savings and then scares them with a lawsuit when they quit. They "let" those people walk away from their stores by having them sign a legal document where the person promises not to Sue them, then they advertise the store for pennies on the dollar and start all over again.

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!

halbertcrocker
halbertcrocker

go to quiznos.com and click on "own one" fill out the app and someone will call or email you in a week or so.

Guest
Guest

Please check out Blue Mau Mau website and type in Quiznos in search bar before you go any furthur!!!!

Read the Postings
Read the Postings

I would suggest your friend review each of the over 400 postings about Quiznos on this site and the numerous other sites related to how Q does business. Can you give more details. Are they getting it for free (take over lease)? What is the rent/income?

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.

unhappy
unhappy

SUBWAY IS #1 IN LOCATIONS ONLY.......NOT PROFIT, BESIDES THEIR FOOD SUCKS

halbertcrocker
halbertcrocker

I have never heard someone say they "loved" subway food. On the other hand Quiznos......yeah, I've heard that about them plenty of times. I've worked for both companies.

john baker
john baker

I LOVE Subway's food. I go out of my way to eat it. It's less expensive and usually very fast. Q is overpriced and have very few selections. Subway's portions are also much better.

Guest
Guest

Just make sure you have a damn GREAT location! Location is everything....oh, and a CLEAN store, great food, friendly service, good staff etc. Be very involved in the day to day operations. Most well run establishments of this type have an owner/operator on site most of the time. The staff will never care about your store as much as you do. You are the one investing your life savings /home whatever into this. BTW, my sister owns a subway in Vegas and they have a PROFIT of $100,000/year! Unlike Q who you will never make a dime owning.

Trackbacks

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