Sandwich chain Quiznos has filed for Chapter 11 bankruptcy protection as it struggles to compete with newer concepts.
Quiznos listed debt of more than $500 million in court documents filed in U.S. Bankruptcy Court in Wilmington, Del. Executives at the restaurant chain agreed to a restructuring plan that will reduce its debt by more than $400 million, the company said in a statement.
Quiznos operates 2,100 locations worldwide, and all but seven are independently owned franchises. All units will remain open during the restructuring.
Quiznos follows behind pizza chain Sbarro, which also filed for Chapter 11 bankruptcy protection last week on Mar. 10.
This is the second attempt in two years that Quiznos has made at getting its finances in order. In early 2012, the company entered an out-of-court restructuring deal with creditors that trimmed its debt by more than a third to approximately $570 million. The turnaround plan stalled, however, when the chain failed to hit its performance targets. Then, at the end of 2013, the chain missed a major loan payment, and eventually entered a forbearance agreement with creditors to give the company more time to pay its debts while maintaining its liquidity.
The Denver-based chain has closed thousands of restaurants over the past few years as it struggles to measure up against its dominant rival Subway and newer upstarts such as Potbelly. Quiznos' store count pales in comparison to Subway's more than 41,000 stores around the globe and 26,000 in the U.S. Quiznos' current store count is less than half of the nearly 5,000 restaurants that were open during its peak in 2008.
The chain's franchise structure has also hindered operations. Franchisees maintain it's difficult to meet sales goals thanks to fees paid to Quiznos. Franchisees are also required to buy everything from food to condiments and paper supplies from Quzinos' distribution business, American Food Distributors, which store operators allege charges more than what they'd pay elsewhere.
Franchisees also gripe that Quiznos has wasted time introducing new products, such as pasta items, rather than improving existing menu items.
-See this Quiznos press release
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