Current CEO Rick Shaden in a Fox Business interview talks about his competition with Subway and the new torpedo sandwich. A few notes:
- Blames slowdown on “economy and increased costs”
- Says customers want cheaper sandwiches
- Touts the $4 Torpedo sandwich, claims it is the “first portable sub”, “modern sandwich”
- Head to head to Subway, more innovative and edgy
- Frames Quiznos as a “challenger brand” to Subway
If I’m a franchisee, and my problem is low profit margins, I do NOT want to LOWER my prices…it just makes the problems worse. However, from a franchisor’s perspective, earnings are based on TOTAL system sales. So if forcing lower-priced sandwiches increases total system-wide sales but still lowers the franchisee’s profitability, some CEO’s may think that is necessary tradeoff. Their short-term financial rewards often pave this path. The interest between the franchise and franchisor are unfortunately are misaligned.If you haven’t seen the torpedo sandwich Shaden speaks of, here is a commercial for it:The Million Sub promotion left many customers upset when many stores refused to honor the “free sub” coupons, including a member of my family. The franchisees apparently are not reimbursed by corporate for the coupon – OUCH!Quiznos is in a tough spot. Their toasted sub concept is no longer unique, and the food and operational costs are still inflated due to franchisor imposed required purchasing.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
